UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2024
or
☐ TRANSITION REPORT PURSUANT OR SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
For the transition period from ______ to ______
Commission File Number: 001-36612
Lifeward Ltd.
(Exact name of registrant as specified in charter)
Israel
Not applicable
(State or other jurisdiction of
incorporation or organization)
(I.R.S. employer
identification no.)
200 Donald Lynch Blvd. Marlborough, MA
01752
(Address of principal executive offices)
(Zip Code)
Registrant’s telephone number, including area code: +972.4.959.0123
Securities registered pursuant to Section 12(b) of the Act:
Title of Each Class
Trading Symbol(s)
Name of Each Exchange on Which Registered
Ordinary Shares, par value NIS 1.75 per share
LFWD
Nasdaq Capital Market
Securities Registered Pursuant to Section 12(g) of the Act: None
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.
Yes ☐ No ☒
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.
Yes ☐ No ☒
Indicate by a check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to
file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Yes ☒ No ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted
pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was
required to submit such files).
Yes ☒ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller
reporting company, or emerging growth company. See the definitions of “large accelerated filer”, “accelerated filer”, “smaller
reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer ☐
Accelerated filer ☐
Non-accelerated filer ☒
Smaller reporting company ☒
Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for
complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the
effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 USC. 7262(b))
by the registered public accounting firm that prepared or issued its audit report. ☐
If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the
registrant included in the filing reflect the correction of an error to previously issued financial statements. ☐
Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-
based compensation received by any of the registrant’s executive officers during the relevant recovery period pursuant to
§240.10D-1(b). ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
Yes ☐ No ☒
The aggregate market value of the Ordinary Shares held by non-affiliates of the Registrant based upon the closing price of the
Ordinary Shares as reported by The Nasdaq Capital Market on June 28, 2024 (the last business day of the Registrant’s most
recently completed second fiscal quarter) was $33,850,860.
As of March 6, 2025, the Registrant had outstanding 10,630,281 Ordinary Shares, par value NIS 1.75 per share.
DOCUMENTS INCORPORATED BY REFERENCE
None.
LIFEWARD LTD.
FORM 10-K FOR THE YEAR ENDED DECEMBER 31, 2024
TABLE OF CONTENTS
Page
No
PART I
ITEM 1.
BUSINESS
1
ITEM 1A.
RISK FACTORS
26
ITEM 1B.
UNRESOLVED STAFF COMMENTS
61
ITEM 1C.
CYBERSECURITY
61
ITEM 2.
PROPERTIES
62
ITEM 3.
LEGAL PROCEEDINGS
62
ITEM 4.
MINE SAFETY DISCLOSURES
62
PART II
ITEM 5.
MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER
PURCHASES OF EQUITY SECURITIES
63
ITEM 6.
[RESERVED]
64
ITEM 7.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
64
ITEM 7A.
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
76
ITEM 8.
FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
77
ITEM 9.
CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
DISCLOSURE
77
ITEM 9A.
CONTROLS AND PROCEDURES
77
ITEM 9B.
OTHER INFORMATION
78
ITEM 9C.
DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS
78
PART III
ITEM 10.
DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
79
ITEM 11.
EXECUTIVE COMPENSATION
89
ITEM 12.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED
STOCKHOLDER MATTERS
98
ITEM 13.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE
101
ITEM 14.
PRINCIPAL ACCOUNTANT FEES AND SERVICES
105
PART IV
ITEM 15.
EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
106
ITEM 16.
FORM 10-K SUMMARY
109
SIGNATURES
110
POWER OF ATTORNEY
111
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
F - 1
i
Definitions and Introduction
Our legal name is Lifeward Ltd. Our name was previously ReWalk Robotics Ltd., which we changed to Lifeward Ltd.
effective September 10, 2024. We are a company limited by shares organized under the laws of the State of Israel and were
founded in 2001. In September 2014, we listed our shares on The Nasdaq Global Market, and in May 2017 we transferred our
listing to The Nasdaq Capital Market. We have irrevocably appointed Lifeward, Inc. as our agent to receive service of process in
any action against us in any United States federal or state court. The address of Lifeward, Inc. is 200 Donald Lynch Blvd.,
Marlborough, Massachusetts 01752. As used herein, and unless the context clearly indicates otherwise, the terms “Lifeward”, the
“Company”, “we”, “us”, “our” or “ours” refer to Lifeward and its subsidiaries.
Special Note Regarding Forward-Looking Statements
This annual report on Form 10-K (“annual report”) contains forward-looking statements within the meaning of Section
27A of the Securities Act of 1933, as amended, or the Securities Act, Section 21E of the Securities Exchange Act of 1934, as
amended, or the Exchange Act, and the safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995, that
are based on our management’s beliefs and assumptions and on information currently available to our management. Forward-
looking statements include information concerning our possible or assumed future results of operations, business strategies,
financing plans, competitive position, industry environment, potential growth opportunities, potential market opportunities and
the effects of competition. Forward-looking statements may include projections regarding our future performance and, in some
cases, can be identified by words such as “anticipate,” “assume,” “believe,” “could,” “seek,” “estimate,” “expect,” “intend,”
“may,” “plan,” “potential,” “predict,” “project,” “future,” “should,” “will,” “would” or similar expressions that convey
uncertainty of future events or outcomes and the negatives of those terms. These statements may be found in the sections of this
annual report titled “Part I. Item 1. Business,” “Part I. Item 1A. Risk Factors,” “Part II. Item 7. Management’s Discussion and
Analysis of Financial Condition and Results of Operations” and elsewhere in this annual report. The statements are based on our
beliefs, assumptions and expectations of future performance, taking into account the information currently available to us. These
statements are only predictions based upon our current expectations and projections about future events. There are important
factors that could cause our actual results, levels of activity, performance or achievements to differ materially from the results,
levels of activity, performance or achievements expressed or implied by the statements.
These factors include those listed in “Part I. Item 1A. Risk Factors,” including those factors summarized below.
•
our expectations regarding future growth, including our ability to increase sales in our existing geographic markets and expand to new markets;
•
our ability to continue as a going concern for the next twelve months;
•
our ability to maintain and grow our reputation and the market acceptance of our products;
•
our ability to achieve reimbursement from third-party payors or advance Centers for Medicare & Medicaid Services (“CMS”) coverage for our
products, including our ability to successfully submit and gain approval of cases for Medicare coverage through Medicare Administrative Contractors
(“MACs”);
•
our ability to successfully integrate the operations of AlterG, Inc. (“AlterG”) into our organization, and realize the anticipated benefits therefrom;
•
our ability to have sufficient funds to meet certain future capital requirements, which could impair our efforts to develop and commercialize existing
and new products;
•
our ability to achieve expected operating efficiencies and sustain or improve operating expense reductions, and our ability to handle any business
disruptions that may occur in connection with streamlining operations;
•
our ability to navigate any difficulties associated with moving production of our AlterG Anti-Gravity Systems to a contract manufacturer;
•
our ability to leverage our sales, marketing and training infrastructure;
•
our ability to grow our business through acquisitions of businesses, products or technologies, and the failure to manage acquisitions, or the failure to
integrate them with our existing business;
•
our ability to obtain certain components of our products from third-party suppliers and our continued access to our product manufacturers;
•
our ability to improve our products and develop new products;
ii
•
our compliance with medical device reporting regulations to report adverse events involving our products, which could result in voluntary corrective
actions or enforcement actions such as mandatory recalls, and the potential impact of such adverse events on our ability to market and sell our
products;
•
our ability to gain and maintain regulatory approvals and to comply with any post-marketing requests;
•
the risk of a cybersecurity attack or incident relating to our information technology systems significantly disrupting our business operations;
•
our ability to maintain adequate protection of our intellectual property and to avoid violation of the intellectual property rights of others;
•
the impact of substantial sales of our shares by certain shareholders on the market price of our ordinary shares;
•
our ability to use effectively the proceeds of our offerings of securities;
•
the impact of the market price of our ordinary shares on the determination of whether we are a passive foreign investment company;
•
market and other conditions, including the extent to which inflationary pressures, interest rate and currency rate fluctuations or global instability may
disrupt our business operations or our financial condition or the financial condition of our customers and suppliers, including the ongoing Russia-
Ukraine conflict, ongoing conflict in the Middle East (including any escalation or expansion) and the increasing tensions between China and Taiwan;
and
•
other factors discussed in “Part I. Item 1A. Risk Factors.”
You should not rely upon forward-looking statements as predictions of future events. Although we believe that the
expectations reflected in the forward-looking statements are reasonable, we cannot guarantee that future results, levels of activity,
performance and events and circumstances reflected in the forward-looking statements will be achieved or will occur.
You should not put undue reliance on any forward-looking statements. Any forward-looking statement in this annual
report speaks only as of the date hereof. Except as required by law, we undertake no obligation to update publicly any forward-
looking statements for any reason after the date of this annual report, to conform these statements to actual results or to changes
in our expectations.
Summary Risk Factors
•
We have concluded that there is substantial doubt as to our ability to continue as a going concern.
•
We may not have sufficient funds to meet certain future operating needs or capital requirements, which could impair our efforts to develop and
commercialize existing and new products, and as a result, we may in the future consider one or more capital-raising transactions, including future
equity or debt financings, strategic transactions, or borrowings which may also further dilute our shareholders or place us under restrictive
covenants limiting our ability to operate freely.
•
We may not fully realize the anticipated positive impacts to future financial results from our streamlining efforts.
•
We face economic and political risks associated with doing business in Taiwan, particularly due to the geopolitical tension between Taiwan and
China, and in Russia that could negatively affect our business and hence the value of your investment.
•
If we fail to meet the requirements for continued listing on the Nasdaq Capital Market, our ordinary shares could be delisted from trading, which
would decrease the liquidity of our ordinary shares and our ability to raise additional capital.
•
We rely primarily on sales of our ReWalk Personal Exoskeletons, AlterG Anti-Gravity systems, MyoCycle FES cycles, and related consumables,
services,and extended warranties for our revenue. We may not be able to achieve or maintain market acceptance of the ReWalk, AlterG, or
MyoCycle products or to generate sufficient revenue from these current and future products to sustain our operations.
•
We may fail to secure or maintain adequate insurance coverage or reimbursement for our products by third-party payors, which risk may be
heightened if insurers find the products to be investigational or experimental or if new government regulations change existing reimbursement
policies. Additionally, such coverage or reimbursement, even if maintained, may not produce revenue that are high enough to allow us to sell our
products profitably.
iii
•
Defects in our products or the software that drives them could adversely affect the results of our operations.
•
The potential health benefits of our ReWalk products have not been substantiated by long-term clinical data, which could limit sales of such
products.
•
We depend on third-party suppliers to manufacture our ReWalk and AlterG products, and we rely on a limited number of third-party suppliers for
certain components of our products.
•
We may receive a significant number of warranty claims or our ReWalk, AlterG, or ReStore systems may require significant amounts of service
after sale.
•
We may not be able to enhance our exoskeleton product offerings through our research and development efforts.
•
We may enter into collaborations, in-licensing arrangements, joint ventures, strategic alliances, business acquisitions or partnerships with third
parties that may not result in the development of commercially viable products or the generation of significant future revenue.
•
Although the FDA granted Breakthrough Device Designation status to our ReBoot device, this designation does not guarantee regulatory
clearance, or a speedier clearance timeline.
•
Our devices are subject to the FDA’s regulations pertaining to marketing and promotional communications, among others. Failure to comply with
such regulations may give rise to a number of potential FDA enforcement actions, any of which could have a material adverse effect on our
business.
•
We are not able to protect our intellectual property rights in all countries.
•
If we are unable to offer our key management personnel long-term incentive compensation, including options, and restricted stock units, as part of
their total compensation package, we may have difficulty retaining such personnel, which would adversely affect our operations and financial
performance.
•
Conditions in Israel, including Israel’s wars against Hamas and other terrorist organizations in the Gaza Strip and against Hezbollah on Israel’s
northern border, may materially and adversely affect our business and results of operations.
•
Our technology development and quality headquarters and the manufacturing facility for our ReWalk products are located in Israel and, therefore,
our results may be adversely affected by economic restrictions imposed on, and political and military instability in, Israel.
•
Our operations and the operations of our contract manufacturer, Sanmina, may be disrupted as a result of the obligation of Israeli citizens to
perform military service.
•
Your rights and responsibilities as a shareholder will be governed by Israeli law, which differs in some material respects from the rights and
responsibilities of shareholders of U.S. companies.
•
Our business could be negatively affected as a result of actions of activist shareholders, which could be disruptive and costly and may impact the
trading value of our securities.
Where You Can Find Other Information
Our principal executive offices are located at 200 Donald Lynch Blvd, Marlborough, MA 01752, and our telephone
number is (508) 251-1154. Our website is golifeward.com. Information contained, or that can be accessed through, our website
does not constitute a part of this annual report and is not incorporated by reference herein. We have included our website address
in this annual report solely for informational purposes. Information that we furnish or file with the Securities and Exchange
Commission (the “SEC”), including annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K
and any amendments to, or exhibits included in, these reports are available for download, free of charge, on our website as soon
as reasonably practicable after such materials are filed or furnished with the SEC. The SEC also maintains a website at
www.SEC.gov that contains reports, proxy and information statements, and other information regarding issuers that file
electronically with the SEC. Our SEC filings, including exhibits filed or furnished therewith, are also available on this website.
iv
PART I
ITEM 1. BUSINESS
Overview
We are a medical device company that designs, develops, and commercializes life-changing solutions that span the
continuum of care in physical rehabilitation and recovery, delivering proven functional and health benefits in clinical settings as
well as in the home and community. Our initial product offerings were the ReWalk Personal and ReWalk Rehabilitation
Exoskeleton devices for individuals with spinal cord injury (“SCI Products”). These devices are robotic exoskeletons that are
designed for individuals with paraplegia that use our patented tilt-sensor technology and an onboard computer and motion
sensors to drive motorized legs that power movement. These SCI Products allow individuals with spinal cord injury (“SCI”) the
ability to stand and walk again during everyday activities at home or in the community. In March 2023, we received clearance of
our premarket notification (“510(k)”) from the U.S. Food and Drug Administration (“FDA”) for the ReWalk Personal
Exoskeleton with stair and curb functionality, which adds usage on stairs and curbs to the indication for use for the device in the
U.S. The clearance permits U.S. customers to participate in more walking activities in real-world environments in their daily lives
where stairs or curbs may have previously limited them when using the exoskeleton for its intended, FDA-indicated uses. This
feature has been available in Europe since initial CE Clearance, and real-world data from a cohort of 47 European users
throughout a period of over seven years consisting of over 18,000 stair steps was collected to demonstrate the safety and efficacy
of this feature and support the FDA submission. In June 2024, we submitted to the FDA a 510(k) premarket notification for
ReWalk 7 Personal Exoskeleton device, a next-generation ReWalk model, and such 510(k) is pending FDA review.
We have sought to expand our product offerings beyond the SCI Products through internal development, distribution
agreements, and acquisitions. We have developed our ReStore Exo-Suit device, which we began commercializing in June 2019
(we ceased sales in the EU in May 2024). The ReStore is a powered, lightweight soft exo-suit intended for use during the
rehabilitation of individuals with lower limb disabilities due to stroke. In the second quarter of 2020, we finalized and moved to
implement two separate agreements to distribute additional product lines in the United States, one of which we later discontinued.
We are the exclusive distributor of the MYOLYN MyoCycle FES Pro cycles to U.S. rehabilitation clinics and for the MyoCycle
Home cycles available to U.S. veterans through the Veterans Health Administration (“VHA”) hospitals.
In August 2023, we made our first acquisition to supplement our internal growth when we acquired AlterG, a leading
provider of Anti-Gravity systems for use in physical and neurological rehabilitation. We paid a cash purchase price of
approximately $19 million at closing and additional cash earnout payments may be paid based upon a percentage of AlterG’s
revenue growth over the two years following the closing. The AlterG Anti-Gravity systems use patented, National Aeronautics
and Space Administration (“NASA”) derived differential air pressure (“DAP”) technology to reduce the effects of gravity and
allow patients to rehabilitate with finely calibrated support and reduced pain. AlterG Anti-Gravity systems are utilized in over
4,000 facilities globally in more than 40 countries. We will continue to evaluate other products for distribution or acquisition that
can broaden our product offerings further to help individuals with neurological injury and disability.
In March 2025, we announced an agreement to increase our penetration of SCI Products into the workers’ compensation
market in which CorLife, LLC., a Delaware limited liability company (“CorLife”) and a division of Numotion, the nation’s
leading and largest provider of products and services that provide mobility, health and personal independence. Pursuant to the
agreement, CorLife became the exclusive distributor for the ReWalk Personal Exoskeleton for individuals with workers’
compensation claims. The agreement leverages CorLife’s extensive network of credentialed providers and experts to include the
ReWalk Personal Exoskeleton among the services and equipment they provide to thousands of injured workers each year. Under
the agreement, the CorLife reimbursement team manages all workers’ compensation claims submissions for the ReWalk Personal
Exoskeleton. We believe this agreement will build awareness of the benefits of the ReWalk Personal Exoskeleton among
individuals with workers’ compensation coverage and gain us access to the resources of CorLife to facilitate efficient processing
of claims.
We are in the research stage of ReBoot, a personal soft exo-suit for home and community use by individuals post-stroke,
and we are currently evaluating the reimbursement landscape and the potential clinical impact of this device. This product would
be a complementary product to ReStore as it provides active assistance to the ankle during plantar flexion and dorsiflexion for
gait and mobility improvement in the home environment, and it received Breakthrough Device Designation from the FDA in
November 2021. Further investment in the development path of the ReBoot was paused in 2023 pending determination regarding
the clinical and commercial opportunity of this device and at this time it remains on hold.
Our principal markets are primarily in the United States and Europe with some lesser sales in Asia, the Middle East and
South America. We sell our products primarily directly in the United States, through a combination of direct sales and distributors
(depending on the product line) in Germany and Canada, and primarily through distributors in other markets. In markets where
we sell direct to consumers, we have established relationships with clinics and rehabilitation centers, professional and college
sports teams, and individuals and organizations in the SCI community, and in markets where we do not sell direct to consumers,
our distributors maintain these relationships. We have primary offices in Yokneam, Israel, Marlborough, Massachusetts, and
Berlin, Germany. We also had offices in Fremont, California and Queens, New York where we ceased operations as of December
31, 2024.
1
We have in the past generated and expect to generate in the future revenue from a combination of clinics and
rehabilitation centers, commercial distributors, third-party payors (including private and government payors), professional and
college sports teams, and self-pay individuals. While a broad uniform policy of coverage and reimbursement by third-party
commercial payors currently does not exist in the United States for exoskeleton technologies such as the ReWalk Personal
Exoskeleton, we are pursuing various paths of reimbursement and support fundraising efforts by institutions and clinics, such as
the VHA policy that was issued in December 2015 for the evaluation, training, and procurement of ReWalk Personal Exoskeleton
systems for all qualifying veterans living with SCI across the United States.
We have also been pursuing updates with the CMS to clarify the Medicare coverage category (i.e., benefit category)
applicable for personal exoskeletons. In 2022, the National Spinal Cord Injury Statistical Center (“NSCISC”), which maintains
the world’s largest database on spinal cord injury research, reported that CMS is the primary payor for approximately 57% of the
SCI population which are at least five years post their injury date, with Medicare representing a majority of this percentage. In
July 2020, following a successful submission and hearing process, a code was issued for ReWalk Personal Exoskeleton, which
may be used for purposes of claim submission to Medicare, Medicaid, and other payors.
On November 1, 2023, CMS released the Calendar Year 2024 Home Health Prospective Payment System Final Rule,
CMS-1780-F (“Final Rule”), which was adopted through the notice and comment rulemaking process. The Final Rule includes a
policy confirming that personal exoskeletons are included in the Medicare brace benefit category, as of January 1, 2024.
Medicare personal exoskeleton claims with dates of service on or after January 1, 2024 that are billed using HCPCS code K1007
are assigned to the brace benefit category. CMS reimburses items classified under the brace benefit category using a lump sum
payment methodology.
On April 11, 2024, CMS revised its April 2024 Durable Medical Equipment, Prosthetics, Orthotics, and Supplies
(“DMEPOS”) Fee Schedule to include a final lump-sum Medicare purchase fee schedule amount for personal exoskeletons
(HCPCS code K1007) with an established rate of $91,032. The final payment determination was made by CMS by applying a
“gap filling” process, which was used in light of CMS determining that the code describing the technology has no fee schedule
pricing history and that lower extremity exoskeletons incorporate “revolutionary features” that cannot be described by or
considered comparable to any other existing code or combination of codes. As part of gap-filling, CMS utilizes verifiable
supplier or commercial pricing information and adjusts this pricing information according to a deflation and update factor
methodology. In applying this formula to the K1007 code describing the ReWalk Personal Exoskeleton, CMS says that it
calculated this final payment amount by averaging pricing information for exoskeleton devices from Lifeward and other
manufacturers.
In Germany, we continue to make progress toward achieving coverage from the various government, private and worker’s
compensation payors for our SCI products. In September 2017, each of German insurer BARMER GEK (“BARMER”) and
national social accident insurance provider Deutsche Gesetzliche Unfallversicherung (“DGUV”) indicated that they will provide
coverage to users who meet certain inclusion and exclusion criteria. In February 2018, the head office of German Statutory
Health Insurance (“SHI”) Spitzenverband (“GKV”) confirmed its decision to list the ReWalk Personal Exoskeleton system in the
German Medical Device Directory. This decision means that ReWalk is listed among all medical devices for compensation,
which SHI providers can procure for any approved beneficiary on a case-by-case basis. During the year 2020 and 2021, we
announced several new agreements with German SHIs, including TK and DAK Gesundheit, as well as the first German Private
Health Insurer (“PHI”), which outline the process of obtaining our devices for eligible insured patients. In February 2025, we
finalized an agreement with BARMER to formalize the reimbursement process for the provision of ReWalk exoskeletons to
medically eligible beneficiaries. We are also currently working with several additional SHIs on securing a formal operating
contract that will establish the process of obtaining a ReWalk Personal Exoskeleton for their beneficiaries within their system.
Additionally, to date, several private insurers in the United States and Europe are providing reimbursement for ReWalk in certain
cases.
2
ReWalk Personal Exoskeleton and ReWalk Rehabilitation Exoskeleton
Development of our SCI Products took over a decade and was spurred by the experiences of our founder, Dr. Amit Goffer,
who became a quadriplegic due to an accident. Current ReWalk designs are intended for people with paraplegia, an SCI resulting
in complete or incomplete paralysis of the legs, who have the use of their upper bodies and arms. We currently offer two products
in this category: the ReWalk Personal Exoskeleton and the ReWalk Rehabilitation Exoskeleton. The ReWalk Rehabilitation
Exoskeleton is substantially similar to the ReWalk Personal Exoskeleton system except that it is sold with multiple sizes of our
adjustable parts to allow different users the ability to train within a clinic. In recent years, substantially all the ReWalk units sold
by the Company have been ReWalk Personal systems and we expect our commercial efforts to continue to focus on this model.
The ReWalk Personal Exoskeleton is a novel product that seeks to fundamentally change the health and life experiences
of users. Designed for daily use, the device is battery-powered and consists of a wearable exoskeleton with integrated motors at
the joints, an array of sensors and a computer-based control system to power knee and hip movement. The user controls the
device movement using a combination of user inputs on the wrist-worn controller, as well as through subtle weight shifts of the
upper body. Because the exoskeleton supports its own weight and facilitates the user’s gait, users do not expend unnecessary
energy while walking. The ReWalk Personal Exoskeleton also allows users to sit, stand and climb and descend stairs and curbs.
In March 2023, the FDA cleared the ReWalk Personal Exoskeleton for use on stairs and curbs, allowing users to participate in
walking activities in more real-world environments in their daily lives and experience more opportunities to enjoy the health
benefits of walking.
● ReWalk Personal Exoskeleton: intended for everyday use at home, at work or in the community with
a trained companion. We began marketing ReWalk Personal Exoskeleton in Europe with CE mark
clearance at the end of 2012. We received FDA de novo authorization to market the ReWalk Personal
Exoskeleton in the United States in June 2014. FDA subsequently cleared 510(k) premarket
notifications for modifications to the ReWalk, including for use of the ReWalk on curbs and stairs.
ReWalk Personal Exoskeleton units are all manufactured according to the same mechanical
specifications. Each unit is then permanently sized to fit the individual user and the software is
configured for the user’s specifications by the rehabilitation center, clinic, or distributor. We are
currently offering our 6th generation device, and in June 2024 we submitted a premarket notification
to FDA for our 7th generation ReWalk design. The submission is currently pending FDA review.
● ReWalk Rehabilitation Exoskeleton: the current offering for clinics who wish to implement
exoskeleton training is composed of our ReWalk Personal Exoskeleton unit along with multiple
sizing of different parts, enabling multiple patient use. The ReWalk Rehabilitation Exoskeleton
provides a valuable means of exercise, training, and therapy. Use of the ReWalk Rehabilitation
Exoskeleton in the clinic also enables individuals to evaluate their capacity for using the ReWalk
Personal Exoskeleton in the future.
ReWalk Personal Exoskeleton
Additionally, we have received regulatory approval to sell the ReWalk Personal Exoskeleton device in other countries. In
the future we intend to seek approval from the applicable regulatory agencies in other jurisdictions where we may seek to market
ReWalk Personal Exoskeleton. For more information about the safety of using our SCI products see “Part I, Item 1A. Risk
Factors—Risks Related to our Business and our Industry— Defects in our products or the software that drives them could
adversely affect the results of our operations.”
3
Overview of Spinal Cord Injury
Spinal Cord Injury
The spine is the central core of the human skeleton and provides structural support, alignment, and flexibility to the body.
The spinal cord, housed inside the bones of the spinal column, is a complex bundle of nerves serving as the main pathway for
information connecting the brain, and nervous system. Spinal cord injury is a serious medical condition that occurs as a result of
physical damage to the nerves of the spinal cord, resulting in a loss of function, such as mobility or feeling. In most people who
have spinal cord injury, the spinal cord is intact. Spinal cord injury is not the same as back injury, which may result from pinched
nerves or ruptured disks. Even when a person sustains a break in a vertebra or vertebrae, there may not be any spinal cord injury
if the spinal cord itself is not affected. There are two types of spinal cord injury – complete and incomplete. In a complete injury,
a person loses all ability to feel and voluntarily move below the level of the injury. In an incomplete injury, there is some
functioning below the level of the injury.
Upon medical examination, a patient is assigned a level of injury depending on the location of the spinal cord injury.
Cervical level injuries cause paralysis or weakness in both arms and legs and is referred to as quadriplegia. Sometimes this type
of injury is accompanied by loss of physical sensation, respiratory issues, bowel, bladder, and sexual dysfunction. Thoracic level
injuries can cause paralysis or weakness of the legs (paraplegia) along with loss of physical sensation, bowel, bladder, and sexual
dysfunction. In most cases, arms and hands are not affected. Lumbar level injuries result in paralysis or weakness of the legs
(paraplegia). Loss of physical sensation, bowel, bladder, and sexual dysfunction can occur. The shoulder, arm, and hand functions
are usually unaffected. Sacral level injuries primarily cause loss of bowel and bladder function as well as sexual dysfunction.
Clinical Evidence
Published clinical studies indicate the ReWalk Personal Exoskeleton’s ability to deliver a functional walking speed. In
addition, certain potential secondary health benefits have been reported in literature as well as by healthcare practitioners and
ReWalk users, including study participants. Although these benefits have not been established as conclusive clinical data in
randomized controlled trials, these reported secondary health benefits include:
●
reduced pain;
●
improved bowel and urinary tract function;
●
reduced spasticity;
●
increases in joint range of motion for the hip and ankle joints;
●
improved sleep and reduced fatigue;
●
improved mental health and quality of life;
●
increase in oxygen uptake and heart rate as a result of walking as opposed to sitting and standing;
●
ability to ambulate at a speed greater than 0.4 meters per second, which is considered to be conducive to outdoor related community
ambulation; and
●
reduced hospitalizations.
We believe that using our SCI Products may have the ability to reduce the lifetime healthcare costs of individuals with
spinal cord injuries, which we believe will make our SCI Products economically attractive for individuals and third-party payors.
While we believe that using our SCI Products could potentially offer significant advantages over competing technologies and
therapies, disadvantages include the time it takes for a user to put on the device, the slower pace of the device compared to a
wheelchair, the training required by the user and companion to use the device, the weight of the device when carried, which
makes it more burdensome for a companion to transport than a wheelchair, and the requirement that users be accompanied by a
trained companion.
Market Opportunity
Current and near-term market opportunities include providing a solution for persons with SCI that can be used in the
clinic and/or home settings. For persons with SCI, reduced physical activity and the predominance of seated activities can lead to
severe physical and psychological deterioration, resulting in bad health, poor quality of life, low self-esteem, and high medical
expenses. In addition, the secondary medical consequences of paralysis can include difficulty with bowel and urinary tract
function, osteoporosis, loss of lean mass, gain in fat mass, insulin resistance, diabetes, and heart disease. The cost of treating
these conditions is substantial. The NSCISC estimates that complications related to paraplegia cost approximately $670,000 in
the first-year post-injury, excluding indirect costs such as loss in wages, fringe benefits, and productivity, and significant
additional amounts over the course of an individual’s lifetime. Further, secondary complications related to spinal cord injury can
reduce life expectancies for SCI patients. The young average age at time of injury and significant remaining life expectancy, the
likelihood of living at home, and the lifetime cost of treatment highlight the need for an out-of-hospital solution with
demonstrated health and social benefits.
4
The NSCISC estimates according to its 2024 SCI Fact Sheet that there are 305,000 people in the United States living with
SCI, with an annual incidence of approximately 18,000 new cases per year. According to the VHA data there are approximately
42,000 of such patients who are veterans and are eligible for medical care and other benefits from the VHA, out of which the
VHA states that 27,000 veterans are receiving SCI treatment annually. With 25 VHA spinal cord injury centers designated SCI/D
Hub locations, the VHA has the largest single network of spinal cord injury care in the United States.
According to the NSCISC, since 2015 motor vehicle crashes have been the leading cause of reported spinal cord injury
cases (38%), followed by falls (32%), acts of violence (15%) and sports injuries (8%). Approximately 79% of spinal cord injuries
occur among the male population. According to NSCISC data, upon hospital discharge, 87% of persons with spinal cord injuries
are sent to private, non-institutional residence (in most cases, their homes prior to injury).
Based on information from the 2023 annual report published by the NSCISC, 40% of the total U.S. population of SCI
patients suffered injuries between levels T4 and L5. Four published ReWalk trials for SCI patients had an aggregate screening
acceptance rate of 50% considering all current FDA limitations, resulting in an estimated 20% of the total population of SCI
patients can be considered as candidates for current ReWalk Personal Exoskeleton or ReWalk Rehabilitation Exoskeleton
according to the device instructions for use. For important qualifying information about this determination, see “Part I, Item 1A.
Risk Factors—Risks Related to our Business and our Industry—The market for medical exoskeletons, including soft exo-suit
devices, remains relatively new and unproven, and important assumptions about the potential market for our current and future
products may be inaccurate.”
Third-Party Reimbursements
United States
In the U.S., individuals typically obtain a ReWalk Personal Exoskeleton for home use through third-party medical
coverage. For an individual who suffered an SCI through a work-related incident, workers’ compensation insurance can be a
source of funding to purchase the device. Similarly, for U.S. veterans, an individual may be covered by the VHA for the purchase
of the device regardless of whether the SCI occurred during active military service.
In December 2015, the VHA issued a national policy or standard operating procedure (“SOP”) for the evaluation,
training, and procurement of ReWalk Personal Exoskeleton systems for all qualifying veterans across the United States and U.S.
Territories. The VHA SOP is the first national coverage policy in the United States for qualifying individuals who are living with
spinal cord injury. In June 2018, the VHA updated the SOP, in part, to expand training options for individuals who could not
complete the mandatory training due to excessive distance/drive times from a VHA-designated site. As of December 31, 2024,
we had placed 49 units as part of the VHA policy. The VHA accounted for 4.5% of our total revenue for the year ended
December 31, 2024.
We continue to work with the VHA to both accelerate the pace of implementation of the current VHA policy nationally,
and to again expand opportunities for veterans to gain access to assessments, training, and devices in facilities outside VHA’s
traditional spinal cord injury “hub and spoke” infrastructure. Community-based, non-VHA clinics are also being leveraged to
allow veterans to be trained closer to their homes, while still being reimbursed by the VHA as part of the VHA’s Community
Care Network program.
5
Successful commercialization depends in significant part on adequate coverage and reimbursement from third party
payors, which may include government payors (such as Medicare and Medicaid programs in the United States), managed care
organizations, and private health insurers. In general, each third-party payor decides which devices will be covered and
reimbursed, establishes reimbursement and co-pay levels and sets conditions for coverage and reimbursement.
While no broad uniform policy of coverage and reimbursement for electronic exoskeleton medical technology exists
among commercial insurance payors in the United States, reimbursement may be evaluated by the payor on a case-by-case basis.
To date, payments for the ReWalk Personal Exoskeleton have been made primarily through case-by-case determinations by third-
party payors, including commercial insurers in the United States, by self-payors and donations and, to a lesser extent, through the
use of funds from insurance and/or accident settlements.
According to the NSCISC 2023 annual report, approximately 57% of the spinal cord injury population received primary
coverage from Medicare and Medicaid within five years after their injury date, with Medicare representing the majority of cases.
In order to be covered and reimbursed by Medicare, the ReWalk Personal Exoskeleton must, among other things, be
classified into an applicable Medicare benefit category. In addition, appropriate codes describing the technology must also be
established to facilitate billing and claims processing.
In December 2019, we submitted the first application for a unique code to describe the ReWalk Personal Exoskeleton and,
in July 2020, a unique code was issued for ReWalk Personal Exoskeleton. On April 11, 2024, CMS revised its April
2024 DMEPOS Fee Schedule to include a final lump-sum Medicare purchase fee schedule amount for personal exoskeletons
(HCPCS code K1007) with an established rate of $91,032. The final payment determination was made by CMS by applying a
“gap filling” process, which was used in light of CMS determining that the code describing the technology has no fee schedule
pricing history and that lower extremity exoskeletons incorporate “revolutionary features” that cannot be described by or
considered comparable to any other existing code or combination of codes. As part of gap-filling, CMS utilizes verifiable
supplier or commercial pricing information and adjusts this pricing information according to a deflation and update factor
methodology. In applying this formula to the K1007 code describing the ReWalk Personal Exoskeleton, CMS says that it
calculated this final payment amount by averaging pricing information for exoskeleton devices from Lifeward and other
manufacturers.
For more information about coverage and reimbursement risk factors, see “Part I, Item 1A. Risk Factors—Risks Related
to our Business and our Industry.”
As part of our plan for growth, we intend to continue working with both national and regional commercial insurance
companies, health care practitioners, physicians, researchers, and the SCI community to support efforts to demonstrate the
benefits of our SCI Products. In addition, we plan to pursue potential coverage policies with third party payors based on
supportive data and appeal rulings that have deemed exoskeleton devices medically necessary and not investigational for
individuals with SCI. Our efforts in the future will be focused on continued education of third-party payors through data
application, published clinical literature, and work with advocacy groups and health and care providers. In addition, we will
continue ongoing communication to seek greater clarity regarding Medicare coverage and reimbursement standards applicable to
the ReWalk Personal Exoskeleton.
Europe
Reimbursement for ReWalk in Europe varies by country and historically certain third-party payors have provided
reimbursement for our products in certain cases in Germany and Italy.
We initially focused our European efforts in Germany where we continue to make progress toward achieving ReWalk
coverage from the various government, private, and workers’ compensation payors. Specifically:
●
In September 2017, the German insurer BARMER confirmed it will provide ReWalk systems to all qualifying beneficiaries. BARMER
provides coverage for nearly nine million people in Germany, as a member of the SHI network and one of the most significant national
insurers in the country. Exoskeletons are provided to users that meet certain inclusion criteria and assessment by the German Health
Insurance Medical Service (Medizinischer Dienst der Krankenversicherungen) before and after training.
6
●
In September 2017 Germany’s national social accident insurance provider, DGUV, indicated that the DGUV’s member payors, including
the health insurance association Berufsgenossenschaft (also known as BG) and state insurers, will approve the supply of exoskeleton
systems for qualifying beneficiaries on a case-by-case basis. DGUV is comprised of 33 different insurers, which provide coverage for
more than 80 million individuals in Germany. Per the agreement, eligible individuals go to BG clinics for evaluation as a part of the
procurement. In May 2020 the DGUV agreed to a binding offer to the evaluation, training, and supply of the ReWalk Personal
Exoskeleton to qualified individuals.
●
In February 2018, the GKV-Spitzenverband (Central Federal Association of (the) Statutory Health Insurance Funds) confirmed its
decision to list the ReWalk Personal Exoskeleton system in the German MDD, a comprehensive list of all medical devices which are
principally and regularly reimbursed by German SHI and PHI providers. The ReWalk Personal was added to the official German list of
medical aids, code number 23.29.01.2001, in June 2018. This decision means that ReWalk Personal Exoskeleton is listed among all
medical devices for compensation, which SHI providers can procure for any approved beneficiary on a case-by-case basis.
●
During the year 2020 we announced several new agreements with SHIs such as TK and DAK-Gesundheit and others as well as the first
PHI that chose to enter into an agreement with us that outline the process to obtaining a device for eligible insured patients.
●
In March 2021 we entered into a contract with BKK Mobile Oil health insurance to supply ReWalk’s Personal Exoskeleton to eligible
persons in Germany.
●
In June 2020, BARMER appealed the decision of the State Social Court, which ordered the supply of the SHI’s insured SCI person with
ReWalk. The State Social Court ruled and deemed ReWalk as the medical aid which will directly compensate the plaintiff’s disability.
BARMER initially appealed this ruling with the Federal Social Court (Bundessozialgericht), but later, in November 2022, withdrew its
pending case and accepted the prior ruling from the state court that exoskeletons are considered as a direct disability compensation. This
outcome means that an eligible insured person with SCI in Germany has a legal basis for the supply of an exoskeleton as an orthopedic
aid for direct disability compensation. Patients in Germany who are covered under these contracts and policies must be medically
evaluated for their eligibility to use the ReWalk Personal Exoskeleton device. If medically qualified, the patient, along with his or her
physician, must apply for coverage of the device. If a patient is found eligible and medically fit to use our ReWalk Personal Exoskeleton
device, we first enter into a rental agreement which allows the patient the necessary period to train on how to use the device which
usually takes between 3 to 6 months and then, after approval from the insurer, the patient receives a personal device to use at home and in
the community.
●
In February 2025, we finalized an agreement with BARMER to formalize the reimbursement process for the provision of ReWalk
exoskeletons to medically eligible beneficiaries. With the completion of the BARMER contract, approximately 45% of the 70 million
people in Germany covered by Statutory Health Insurance now have coverage policies with a defined reimbursement process for personal
exoskeletons. We are currently working with several additional SHIs and PHIs on securing a formal operating contract that will establish
the process of obtaining a ReWalk Personal Exoskeleton for their beneficiaries within their system.
As of December 31, 2024, there were 44 insurance cases pending in Germany. We believe that our recent coverage
decisions and the existing claims will eventually lead other German insurers to provide coverage on a broader scale, but this is
not guaranteed. For more information, see “Part I, Item 1A. Risk Factors—Risks Related to our Business and our Industry— We
may fail to secure or maintain adequate insurance coverage or reimbursement for our products by third-party payors which risk
may be heightened if insurers find the products to be investigational or experimental or if new government regulations change
existing reimbursement policies. Additionally, such coverage or reimbursement, even if maintained, may not produce revenue
that is high enough to allow us to sell our products profitably.”
We continue to support clinical research and academic publications, which we believe will further support the case for
coverage.
7
We have distribution agreements in several European countries where we also had success with reimbursement by private
insurers and worker’s compensation. One of the examples was achieved in March 2018, when the Italian Ministry of Labor and
Social Policy’s statutory insurance corporation put in place a coverage policy that will provide exoskeleton systems for all
qualifying beneficiaries. This policy, the first of its kind in Italy, provides individuals with spinal cord injury access to obtain their
own ReWalk Personal Exoskeleton device so that they can stand and walk again. Since the initiation of coverage, we have
supplied 10 units through our Italian distributor to individuals covered by this policy.
Other Funding Sources
In addition to being funded by third-party payors, including private insurance plans, government programs such as the
VHA, and workers’ compensation plans, ReWalk Personal Exoskeleton is also funded by self-payors. This includes individuals
who purchase ReWalk with funds from legal settlements with insurance companies or third parties.
AlterG Anti-Gravity System
The DAP technology that underpins our AlterG Anti-Gravity technology originated from researchers at the NASA Moffet
Field Research Center to help astronauts maintain their muscle strength and bone density during extended periods in space
outside of the effects of earth’s gravity. The DAP technology was used to create a pressurized bubble that could exert pressure on
an astronaut while exercising to simulate the impact of gravity. While the technology ultimately was never implemented by
NASA, it also had promise for use on earth.
The DAP technology was modified by the founders of AlterG, Inc. for the opposite purpose of using the buoyancy of a
pressurized air chamber to uniformly reduce gravitational load and body weight. With subsequent product development, the
initial AlterG Anti-Gravity system design was supplemented with other complementary features. Our current models utilize a
precise air calibration system which modulates the air pressure supporting the user 100 times a second to ensure precise and
consistent weight displacement that allows for modification of the pressurized support in one-percent increments of each user’s
weight. Additionally, the AlterG systems can be fitted with cameras for live video monitoring and pressure sensors that track the
user’s gait pattern.
Our proprietary Stride Smart software can provide real-time data and analytics so that the user can watch and self-correct
gate abnormalities. Clinicians also can simultaneously read and respond to five gait assessment key performance indicators
(“KPIs”). The five KPIs include:
●
weight-bearing symmetry;
●
step length symmetry;
●
stance time symmetry;
8
●
cadence (stepping frequency); and
●
pain level.
The Stride Smart software provides clinicians with clear, objective data with which to assess, adjust, and modify a
patient’s rehabilitation progress. Since Stride Smart collects and presents patient gait data automatically, clinicians can focus their
efforts rehabbing the patient and selecting the data most useful to their gait analysis and correction recommendations.
Based on usage patterns and feedback of clinicians, we believe that the AlterG Anti-Gravity system provides a versatile
tool for the rehabilitation of lower extremity injuries and conditions. By treating a broad range of conditions and facilitating faster
recovery times, the AlterG Anti-Gravity system enables rehabilitation clinics the opportunity to gain more referrals, increase the
throughput of the facility, and improve the productivity of the staff.
We offer a range of AlterG Anti-Gravity systems depending on the needs and budget of each customer as follows:
•
NEO – Introduced in 2024, this is the entry-level and most accessible model of Anti-Gravity system to enable increased adoption of Anti-
Gravity technology across a broader range of clinics and training facilities. The NEO model delivers the same patented DAP technology
with an updated platform and new electronic handrail height adjustment. The NEO is equipped to run at up to 10 miles per hour (“mph”)
in forward and 3 mph in reverse with a maximum incline of 15 degrees;
•
NEO+ – The most versatile offering within the AlterG family builds upon the benefits of the NEO with added speed up to 12 mph and an
integrated camera. The NEO+ also offers additional options for further customization, including a high-speed option of up to 15 mph and
the addition of our Stride Smart gait analytics software package.; and
•
PRO – The PRO is our top-of-the-line model for sports medicine and elite sports applications with utilization by professional and
collegiate athletes. The PRO is designed for robust performance with a slat-belt design equipped to run at up to 18 mph in forward and 10
mph in reverse, with all software and speed options included as standard.
In addition to sales of the AlterG Anti-Gravity systems, we also provide consumables and services that support the
utilization of the installed base. For example, the AlterG systems require the users to wear proprietary shorts that zip the user into
the air chamber to create the seal to maintain the air pressurize. With frequent use, these shorts need to be periodically replaced.
Additionally, we maintain a network of approximately 40 contract service engineers who perform the installation, maintenance,
and repair work. As the 12-month assurance warranties expire, we market extended service contracts which can provide a
recurring revenue base that can grow with the size of the installed base.
The potential market for AlterG Anti-Gravity systems is large and fragmented with several types of facilities that treat
patients with conditions who could benefit from rehabilitation using partial weight displacement. According to the MedPAC 2024
Report, there are approximately 1,180 certified inpatient rehabilitation facilities in the U.S. These facilities treat patients with a
range of conditions including stroke, lower extremity fractures, joint replacements, neurological conditions and brain injury,
cardiac conditions, and other types of orthopaedic conditions. Depending on the specific details of each case, many of these
patients are candidates for therapy using partial weight displacement. Globally, we estimate that there are approximately 3,500
inpatient rehabilitation facilities that are comparable in budget and quality of care to those in the U.S.
9
The largest potential market for the AlterG Anti-Gravity systems are outpatient clinics, some of which are in national and
regional affiliations and most of which are independent facilities. According to the IBIS World Industry Report (which tracks the
number of physical therapy rehabilitation centers), there were approximately 54,000 outpatient clinics in the U.S. in 2024. These
facilities treat patients with less severe conditions than inpatient facilities with a greater mix of patients skewed towards lower
extremity fractures, joint replacements, and other types of orthopedic conditions. Globally, we estimate that there are over
100,000 outpatient clinics based on scaling of population and standard of living that there are over 100,000 outpatient clinics.
One other major segment of the market for AlterG systems consists of professional and elite level sports teams, including major
university and college sports programs. These teams use the AlterG Anti-Gravity system to assist their players in maintaining
higher levels of fitness and accelerating the recovery time from sports-related injuries. Based on our internal estimates of the
market, we believe that there are approximately 1,400 sports programs in the U.S. who are potential AlterG customers. Globally,
we estimate this figure to be greater than 4,000 teams.
ReStore Exo-Suit
In June 2017, we unveiled our lightweight ReStore Exo-Suit system designed initially for
rehabilitation of stroke patients. The patented soft exo-suit technology was originally developed at
Harvard University’s Wyss Institute for Biologically Inspired Engineering (“Harvard”), where it also
underwent initial clinical testing that demonstrated potential to improve walking for stroke survivors.
ReWalk and Harvard entered into a multi-year research collaboration agreement in 2016 which provides
ReWalk license to intellectual property relating to lightweight exo-suit system technologies for lower
limb disabilities and provides access to future innovations that emerge from this collaboration and may be
relevant to additional stroke products or other therapies. The development and regulatory clearance
process for ReStore took us approximately three years. We received FDA clearance for ReStore in June
2019. We also obtained a CE mark in May 2019 but because the ReStore product was not planned for
MDR conformity we had to cease sales in the EU in May 2024. Following the regulatory clearances, we
began to commercialize the ReStore product. For more information on the collaboration with Harvard,
see “Research and Development-Research and Development Collaborations.”
ReStore Exo-Suit
The ReStore product consists of a soft, fabric-based design that connects to a lightweight waist pack and mechanical
cables that help lift the patient’s affected leg in synchronized timing with their natural walking pattern. The lightweight structure
wraps around the waist and supports an actuator with a motor, computer, and cable, along with sensors attached to a stable point
on the user’s calf and footplate in the user’s shoe. This design provides targeted mechanical assistance to the patient’s ankle
during forward propulsion (plantarflexion) and ground clearance (dorsiflexion), two key phases of the gait cycle. The ReStore
system is designed to provide advantages to stroke rehabilitation clinics and therapists as compared to other traditional therapies
and devices by enabling the therapist to specifically target and train for improved propulsion symmetry, which is a key
contributor to improved walking speed and efficiency for patients recovering from stroke.
Published clinical trials using the soft exo-suit design on stroke patients have shown varying levels of improvements, with
the main ones being improved walking speed, improved propulsion symmetry, reductions in compensatory behaviors including
paretic hip hiking and circumduction as well as reduction in metabolic burden associated with post stroke walking. There are
additional studies on-going with the ReStore device that examine the improvement in walking speed following training with the
soft exo-suit as well as comparing the results of traditional training with soft exo-suit training.
10
The main market for ReStore is rehabilitation clinics with a stroke therapy program or clinics that would like to broaden
their stroke presence.
This product is marketed and sold directly to rehabilitation clinics for use during the treatment of their
patients which is generally reimbursed by commercial and government payors. During the second half of 2019 we expanded our
sales and
marketing presence in the United States to accelerate product penetration after receiving FDA clearance and CE mark.
These efforts were adversely impacted by the COVID-19 pandemic, as clinics and hospitals shifted resources and attention
during the
pandemic. During 2024, new research was published on the clinical efficacy using ReStore in stroke rehabilitation and
we see this technology as a building block for future portfolio development.
Stroke incidence rate in the United States is approximately 800,000 incidences per year and the survival rate is
approximately 80%. Of this stroke
population, 80% are left with some type of lower limb disability. This patient population seeks
treatment in one of the approximately 1,600 primary and comprehensive inpatient, outpatient, and rehabilitation clinics providing
therapy to stroke
patients. With the clinical evidence we have to date on ReStore, its unique design and its cost-effectiveness
compared to other products, we believe the ReStore soft exosuit has an opportunity to be adopted by clinics for use in therapy of
their
stroke patients. However, we also recognize that the process to achieve that might be long and will likely only occur once
national or regional healthcare providers include the device within their stroke therapy programs. We also believe that to
accelerate adoption, further clinical evidence is required as well as continued education on the new ReStore design and its unique
advantages compared to current therapies and products.
As of December 31, 2024, and December 31, 2023, we had placed 43 and 42 ReStore units, respectively.
ReBoot Product
We are also in the research stage of ReBoot, a soft exoskeleton for stroke home and community use, and are currently
evaluating the reimbursement
landscape and the potential clinical impact of this device. This product would be a complementary
product to ReStore, and it received Breakthrough Device Designation from the FDA in November 2021. The ReBoot is a
lightweight, battery-powered
exo-suit intended to assist ambulatory functions in individuals with reduced ankle function related
to neurological injuries, such as stroke. The ReBoot is a customizable personalized device intended for home and community use
with an estimated
market of approximately 400,000 annual stroke patients who require walking assistance after being discharged
home. Further investment in the development path of the ReBoot was paused in 2023 pending further determination about the
clinical and
commercial opportunity of this device and at this time it remains on hold.
Sales and Marketing Activities
With added resources from acquiring AlterG, Inc., we have created a U.S. commercial team that we believe has the
capacity and capabilities to
support a broad range of physical and neurological rehabilitation products for use in facilities, the
home and the community. As part of this integration, we have rebranded our company under the name Lifeward, to emphasize
our commitment to
pioneering a portfolio of innovative technologies to empower the pursuit of life’s ambitions in the face of
physical limitation or disability. For the sake of clarity, we will continue to use the ReWalk name to designate our line of
exoskeleton
products and the AlterG name to describe our line of Anti-Gravity systems.
In the U.S., our commercial efforts are direct sales focused generally on rehabilitation centers, hospitals, rehabilitation
clinics, and similar
facilities that treat patients who could benefit from offerings within our portfolio of products. We market our
facility-based products, such as the AlterG and the MyoCycle Pro to these institutions for their use in providing care to their
patients. We also market our home-based products, such as the ReWalk Personal Exoskeleton or MyoCycle Home, to physicians
and physical therapists for referrals to individuals who could benefit from these devices as part of a home-based activity
regimen
that elevates the health and wellness of these individuals. Additionally, some sales of the ReWalk Personal Exoskeleton or
MyoCycle Home are also generated from referrals through the spinal cord injury community and direct inquiries from
potential
users through our different marketing efforts. Beyond healthcare facilities, we also market our AlterG systems to professional and
college sports teams who use the systems to help their athletes recover from lower extremity sports
injuries.
11
Outside the U.S., our distribution varies depending on the product and the geographic market. We market our ReWalk
Personal Exoskeleton product
directly in Germany and primarily through third-party distributors, who maintain the customer
relationships, in our other markets. We market our AlterG systems directly in Canada, and in other territories utilize a network of
over 40 third-party
distributors who generally have exclusivity in their respective geographic territories.
As of December 31, 2024, we had placed 131 ReWalk Rehabilitation Exoskeleton units in use at rehabilitation centers and
689 ReWalk Personal
Exoskeleton units in a home or community use, compared to 131 ReWalk Rehabilitation Exoskeleton units
and 616 ReWalk Personal Exoskeleton units as of December 31, 2023. We estimate the installed base of AlterG systems is over
6,000 installed units
worldwide as of December 31, 2024. With the finalization of the Medicare payment rates for exoskeletons
that was effective April 1, 2024, we have begun to aggressively target the eligible Medicare customer base for growth while also
continuing to
focus on expanding commercial and other reimbursement coverage. Additionally, with our increased direct sales
resources and distributor network, we also expect to greater penetrate the base of facilities which could utilize AlterG systems for
rehabilitation of their patients.
Competition
The market in which we operate is characterized by active competition and rapid technological change, and we expect
competition to increase.
Competition arises from providers of other mobility systems and prosthetic devices used in the clinic
and/or home settings.
We are aware of several other companies developing competing technology and devices, and some of these competitors
may have greater resources,
greater name recognition, broader product lines, or larger customer bases than we do.
Our principal competitors in the medical exoskeleton market consist of Ekso Bionics (NASDAQ: EKSO), Rex Bionics
Pty, Cyberdyne (Tokyo Stock
Exchange: 7779), FREE Bionics, DIH (formerly known as Hocoma), Wandercraft, and Bioness
(acquired by Bioventus (NASDAQ: BVS)). The competitors’ products may also compete with the ReStore Exo-Suit, as well as
manual forms of gait training which do
not involve robotic assistive devices.
We believe that our ReWalk Personal Exoskeleton possesses key competitive advantages over these companies’ products,
such as our tilt-sensor
technology that provides a self-initiated walking experience, six degrees of freedom which enable a more
natural gait, faster functional walking speed, the ability to support its own weight, and robust durability in real-world conditions.
In
addition, ReWalk Personal Exoskeleton is the only medical exoskeleton with FDA and CE clearance for use on stairs and
curbs, which greatly improves the ability to use the device in everyday real-world environments.
We believe that our ReStore Exo-Suit device has several competitive advantages over the products of our competitors,
including a design that
facilitates a natural, functional walking pattern through flexible materials, sensors, and powered
plantarflexion as well as dorsiflexion, making it the only solution of its type of which we are aware of that supports such
movements, achieving that
with a lower cost and weight than rigid exoskeletal devices.
In addition, are aware of a number of academic and early stage research into exoskeletons for various applications. Other
medical device or
robotics companies, academic and research institutions, or others may develop new technologies or therapies
that provide a superior walking experience, are more effective in treating the secondary medical conditions that we target or are
less
expensive than our current or future products. Our technologies and products could be rendered obsolete by such
developments.
We may also compete with other treatments and technologies that address the secondary medical conditions that ReWalk
seeks to mitigate.
Community Engagement and Education
We devote significant resources to engagement with and education of the spinal cord injury community with respect to the
benefits of our SCI
Products. We actively seek opportunities to partner with hospitals, rehabilitation centers and key opinion
leaders to engage in research and development and clinical activities. We also seek to educate and gain support from
organizations such as
patient advocacy groups and clinician societies with the goal of promoting adoption of exoskeleton
technology from patient, clinician, and payor communities. We believe that our success has been and will continue to be driven in
part by our
reputation and acceptance within the spinal cord injury community.
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To date, multiple advocacy groups have issued public endorsements of the ReWalk Personal Exoskeleton, including
leading United States-based
national organizations such as the United Spinal Association and the Dana and Christopher Reeves
Foundation, as well as others. In addition, the National Institute for Health and Care excellence in the United Kingdom (also
known as “NICE”) has
issued a public announcement regarding the ReStore device.
Services and Customer Support
Our commercial centers of operations in Marlborough, Massachusetts and Berlin, Germany coordinate all customer
support and product service
functions for North America and Europe, respectively, through dedicated technical service personnel
who provide product services and customer support through training to healthcare providers and support to product users. We
also had a commercial
location in Fremont, California where we ceased operations as of December 31, 2024.
Research and Development
We are committed to investing in a robust research and development program to support our current product line and to
potentially develop our
pipeline of new and complementary products, and we believe that ongoing research and development
efforts are essential to our success. Our research and development team consists of both in-house and external staff, including
engineers, machinists,
researchers and marketing, quality, manufacturing, regulatory and clinical personnel, which we employ as
efficiently as possible meet our current and future needs, and who work closely together to design, enhance, and validate our
technologies.
This research and development team conceptualizes technologies and then builds and tests prototypes before
refining and/or redesigning, as necessary. Our regulatory and clinical personnel work in parallel with engineers and researchers,
allowing us
to anticipate and resolve potential issues at early stages in the development cycle. Our level of research and
development investment depends on our available resources, business plans, and future needs. For more information, see “Part I,
Item 1A.
Risk Factors — Risks Related to Our Business and Our Industry — Our future growth and operating results will depend
on our ability to develop, receive regulatory clearance for, and commercialize new products and penetrate new product and
geographic
markets.”
We are working on product design improvements and expanded labeling for the ReWalk Personal Exoskeleton product
which we plan to launch following
obtaining regulatory clearance and approvals. In the longer term we are conducting research
for our next generation exoskeleton with design improvements and advanced robotic technologies such machine vision, AI and
sensor fusion as part of the
Human Robot Interaction Consortium research program. New medical indications impacting the
ability to walk that we may pursue include multiple sclerosis, cerebral palsy, Parkinson’s disease, and elderly assistance.
We are also considering new generations of anti-gravity systems utilizing our DAP technology, including the NEO which
was introduced in 2024 as an
entry-level and most accessible model of Anti-Gravity™ system to enable increased adoption of
Anti-Gravity™ technology across a broader range of clinics and training facilities. Additionally, we are evaluating other
applications for DAP technology
to create entirely new rehabilitation systems for our facility-based customers.
We conduct our research and development efforts mainly at our facility in Yokneam, Israel. We believe that the close
interaction among our
research and development and manufacturing groups allows for timely and effective realization of our new
product concepts.
Our research and development efforts have been financed, in part, through funding from the Israel Innovation Authority
(formerly known as Office
of the Chief Scientist in the Israel Ministry of Economy) (the “IIA”). From our inception through
December 31, 2024, we received funding totalling $2.8 million from the IIA. For more information regarding our research and
development financing
arrangements, see “Part II. Item 7. Management’s Discussion and Analysis of Financial Condition and
Results of Operations—Liquidity and Capital Resources” and “—Grants and Other Funding.”
13
Research and Development Collaborations
On April 1, 2022, we entered a research and development cooperation agreement with several companies and universities
in the Human Robot
Interaction (“HRI”) Consortium, part of the IIA’s MAGNET incentive program. This incentive program
provides grants for R&D collaboration as part of a consortium comprised of private businesses and leading academic centers. The
goals of the HRI
consortium are to “develop advanced technologies aimed at providing robots with social capabilities, enabling
them to carry out various tasks and effective interactions with different users in diverse operational environments.” The total
program
has a budget of NIS 57 million, which includes funding for research and development grants to help drive technological
innovation. The Consortium is a 3-year program which has allocated NIS 1.745 million to fund ReWalk-specific projects over the
first 18-month period of the program. In November 2023, we entered the second 18-month period of the program, the Consortium
has allocated NIS 1.336 million to fund ReWalk-specific projects over the second 18-month period. As of December 31, 2024,
the Company spent total funds in the amount of NIS 2.903 million. As a member of the HRI Consortium, we collaborate with
several universities to develop advanced technologies aimed at improving the human-exoskeleton interaction. This research
collaboration with top researchers in the fields of robotics, behavioral sciences and human-computer interaction will seek to make
the use of exoskeletons easier and more natural to promote wider adoption of the technology.
On May 16, 2016, we entered into the Research Collaboration Agreement (“Collaboration Agreement”) and the Exclusive
License Agreement (“Harvard
License Agreement”) with Harvard. Under the Collaboration Agreement, we and Harvard agreed
to collaborate on research regarding the development of lightweight soft suit exoskeleton system technologies for lower limb
disabilities, which are intended
to treat stroke, multiple sclerosis, mobility limitations for the elderly and other medical
applications. Under the Collaboration Agreement, we paid Harvard quarterly installment payments to help fund the research.
Subject to the terms of the
Collaboration Agreement, we and Harvard were required to report our respective research results and
findings to each other on a regular basis. The Collaboration Agreement governed ownership of the research results and inventions
generated in
performance of the research collaboration and provided us the option to negotiate with Harvard for a license to
certain new inventions of Harvard conceived in performance of the collaboration. The Collaboration Agreement concluded on
March 31,
2022.
Under the Harvard License Agreement, we have been granted an exclusive, worldwide royalty-bearing license under
certain patents of Harvard
relating to lightweight “soft suit” exoskeleton system technologies for lower limb disabilities, a
royalty-free license under certain related know-how and the option to obtain a license to certain inventions conceived under our
joint research
collaboration. Harvard retains the right to practice the patents for research, educational and scholarly purposes. We
are required to use commercially reasonable efforts to develop products under the Harvard License Agreement in accordance
with an
agreed-upon development plan and to introduce and market such products commercially. In addition to an upfront fee and
royalties on net sales, we are obligated to pay Harvard certain milestone payments upon the achievement of certain product
development and commercialization milestones. We have also agreed to reimburse Harvard for expenses incurred in connection
with the filing, prosecution, and maintenance of the licensed patents.
The Harvard License Agreement will continue in full force and effect until the expiration of the last-to-expire valid claim
of the licensed
patents, or it is terminated in accordance with its terms. We may terminate the License Agreement for any reason
upon 60 days’ prior written notice, while Harvard may terminate the License Agreement if we do not maintain requisite insurance
or
become insolvent. The Harvard License Agreement may also be terminated by Harvard or us due to the other party’s material
uncured breach.
The Harvard License Agreement contains, as applicable, customary representations and warranties and customary
enforcement, indemnification, and
insurance provisions. For further discussion of the Collaboration Agreement and Harvard
License Agreement, see Note 10 to our consolidated financial statements for the fiscal year ended December 31, 2024 included
elsewhere in this annual report.
14
Intellectual Property
Protection of our intellectual property is important to our business. We seek to protect our intellectual property through a
combination of
patents, trademarks, confidentiality, and assignment agreements with our employees and certain of our
contractors and confidentiality agreements with certain of our consultants, scientific advisors and other vendors and contractors.
In addition, we
rely on trade secrets law to protect our proprietary software and product candidates/products in development.
In addition to our portfolio of issued patents and pending patent applications, we license certain patented and patented
pending technology from a
third party as described above under the “Research and Development” section.
For our ReWalk product line, as of December 31, 2024, we have 12 issued patents in the United States and 24 issued
patents outside of the United
States, as well as 11 pending patent applications for our technology in the United States, China, and
Europe, including one pending international PCT application. For our patents associated with DAP and other AlterG technology,
as of December 31,
2024, we have 28 issued patents in the United States and 9 patents issued outside the United States, as well as
10 pending patent applications for anti-gravity associated technology in the United States.
In the United States and Europe, we have apparatus patent claims covering aspects of both our exoskeleton and our anti-
gravity products and
similar devices or systems, which focus on protecting our products in terms of structural characteristics and
functionality. Moreover, we also have method patent claims covering certain methods of operation and control of our exoskeleton
and
anti-gravity products, which provide additional protection for our technology. We do not currently license any of the
technology contained in our currently commercialized ReWalk and AlterG products, other than with respect to technology that is
generally publicly available, but we may do so in the future.
Patents filed both in the United States and Europe (as well as other countries) generally have a term of 20 years from their
earliest effective
filing date, although they can be slightly longer depending upon a local jurisdiction’s rules and laws. For
example, the oldest of our issued patents relating to our tilt-sensor technology was filed in May 2001 in the United States and
would
typically expire in May 2021. However, this patent actually expired in April of 2023 due to patent term adjustment (PTA)
of 689 days for delays in examination by the United States Patent and Trademark Office.
We currently hold a registered trademark in the United States, Europe, Israel, and the United Kingdom, for the mark
ReWalk®. We currently hold a registered trademark in United States, Europe and the United Kingdom for the mark ReStore®.
We currently hold the trademarks Alter G™ and Anti-Gravity Treadmill™ in the United States, Canada and Japan. The
trademark
Alter G™ is also held in the United Kingdom and Europe. We currently hold the registered trademark Defy Gravity®
in the United States. We also hold a registered trademark for Lifeward® in the Europe, the United Kingdom, and Israel. The
application to register the trademark Lifeward™ is pending in the United States.
We cannot be sure that our intellectual property will provide us with a competitive advantage especially as some of our
older patents begin to
expire, or that we will not infringe on the intellectual property rights of others. In addition, we cannot be
sure that any patents will be granted in a timely manner or at all with respect to any of our patent pending applications. For a
more
comprehensive discussion of the risks related to our intellectual property, see “Part I, Item 1A. Risk Factors—Risks Related
to Our Intellectual Property.”
Government Regulation
U.S. Regulation
Our medical products and manufacturing operations are regulated by the FDA and other federal and state agencies. Our
products are regulated as
medical devices in the United States under the Federal Food, Drug, and Cosmetic Act, or the FFDCA,
as implemented and enforced by the FDA. The FDA regulates the development, testing, manufacturing, labeling, storage,
installation, servicing,
advertising, promotion, marketing, distribution, import, export, and market surveillance of our medical
devices.
15
Premarket Regulatory Requirements
Unless an exemption applies, each medical device commercially distributed in the United States requires either FDA
clearance of a 510(k) premarket
notification, approval of a premarket approval application (PMA), or issuance of a de novo
classification order. Under the FFDCA, medical devices are classified into one of three classes—Class I, Class II or Class III—
depending on the degree of
risk associated with each medical device and the extent of control needed to provide reasonable
assurance of safety and effectiveness. Classification of a device is important because the class to which a device is assigned
determines, among other
things, the necessity and type of FDA review required prior to marketing the device. Class I devices are
those for which reasonable assurance of safety and effectiveness can be assured by adherence to general controls that include
compliance with
the applicable portions of the FDA’s Quality System Regulation, or QSR, facility registration and product
listing, reporting of adverse medical events, and appropriate, truthful and non-misleading labeling, advertising, and promotional
materials.
Class I also includes devices for which there is insufficient information to determine that general controls are sufficient
to provide reasonable assurance of the safety and effectiveness of the device or to establish special controls to provide
such
assurance, but that are not life-supporting or life-sustaining or for a use which is of substantial importance in preventing
impairment of human health, and that do not present a potential unreasonable risk of illness of injury.
Class II devices are those for which general controls alone are insufficient to provide reasonable assurance of safety and
effectiveness and there
is sufficient information to establish “special controls.” These special controls can include performance
standards, post-market surveillance, and patient registries. While most Class I devices are exempt from the 510(k) premarket
notification
requirement, most Class II devices require a 510(k) premarket notification to be marketed in the U.S. As a result,
manufacturers of most Class II devices are required to submit to the FDA premarket notifications under Section 510(k) of the
FFDCA in
order to market or commercially distribute those devices. To obtain 510(k) clearance, manufacturers must demonstrate
that the proposed device is “substantially equivalent” to a predicate device already on the market. A predicate device is a legally
marketed device that is not subject to premarket approval, or PMA, meaning, (i) a device that was legally marketed prior to May
28, 1976 (pre-amendments device) and for which a PMA is not required, (ii) a device that has been reclassified from
Class III to
Class II or I, or (iii) a device that was found substantially equivalent through the 510(k) process. If the FDA agrees that the
device is substantially equivalent to a predicate device currently on the market, it will grant 510(k)
clearance to commercially
market the device. If the device is not “substantially equivalent” to a previously cleared device, the device is automatically a
Class III device. The device sponsor must then fulfill more rigorous premarket approval
requirements or can request a risk-based
classification determination for the device in accordance with the “de novo” classification process, which is a route to market for
medical devices that are low to moderate risk but are not substantially
equivalent to a predicate device.
Devices that are intended to be life sustaining or life supporting, devices that are implantable, devices that present a
potential unreasonable
risk of harm or are of substantial importance in preventing impairment of health, and devices that are not
substantially equivalent to a predicate device are placed in Class III and generally require approval of a PMA, unless the device is
a
pre-amendment device not yet subject to a regulation requiring premarket approval. The PMA process is more demanding than
the 510(k) premarket notification process. In a PMA, the manufacturer must demonstrate that the device is safe and effective,
and
the PMA must be supported by extensive data, including data from preclinical studies and clinical trials. The PMA must also
contain a full description of the device and its components, a full description of the methods, facilities and controls
used for
manufacturing, and proposed labeling. Following receipt of a PMA, the FDA determines whether the application is sufficiently
complete to permit a substantive review. If the FDA accepts the application for review, it has 180 days under the
FFDCA to
complete its review of a PMA, although in practice, the FDA’s review often takes significantly longer and can take one year or
more.
16
Clinical trials are almost always required to support PMAs and are sometimes required to support 510(k) submissions. All
clinical investigations
of devices to determine safety and effectiveness must be conducted in accordance with the FDA’s
investigational device exemption, or IDE, regulations that govern investigational device labeling, prohibit promotion of the
investigational device, and
specify recordkeeping, reporting and monitoring responsibilities of study sponsors and study
investigators. If the device presents a “significant risk,” as defined by the FDA, the agency requires the device sponsor to submit
an IDE application to
the FDA, which must become effective prior to commencing human clinical trials. The IDE will
automatically become effective 30 days after receipt by the FDA, unless the FDA denies the application or notifies the company
that the investigation may
not begin. If the FDA determines that there are deficiencies or other concerns with an IDE that require
modification of the study, the FDA may permit a clinical trial to proceed under a conditional approval. In addition, the study must
be approved
by, and conducted under the oversight of, an Institutional Review Board, or IRB, for each clinical site. If the device
presents a non-significant risk to the patient, a sponsor may begin the clinical trial after obtaining approval for the trial by
one or
more IRBs without separate approval from the FDA, but must still comply with abbreviated IDE requirements, such as
monitoring the investigation, ensuring that the investigators obtain informed consent, and labeling and record-keeping
requirements.
In June 2014, the FDA granted our request for “de novo” classification, and classified ReWalk as a Class II powered
exoskeleton device subject to
special controls. The ReWalk is intended to enable individuals with spinal cord injuries to perform
ambulatory functions under supervision of a specially trained companion, and inside rehabilitation institutions. The special
controls established in
the de novo classification order for all powered exoskeleton devices include the following: clinical testing
to demonstrate safe and effective use considering the level of supervision necessary and the use environment; non-clinical safety
and
performance testing, including durability testing to demonstrate that the device performs as intended under anticipated
conditions of use; a training program; and labeling related to device use and user training. The special controls of this de
novo
order also apply to competing powered exoskeleton products seeking FDA clearance.
In June 2019, the FDA issued a 510(k) clearance for ReStore, which means that the device can be marketed in the
U.S.
ReStore is intended to be used to assist ambulatory functions in rehabilitation institutions under the supervision of a trained
therapist for people with hemiplegia or hemiparesis due to stroke. ReStore complies with special controls for
powered
exoskeletons as described above. In order for us to market ReStore and ReWalk, we must comply with both these special controls
as well as general controls, including controls related to quality, facility registration, reporting of adverse
events and labelling.
Failure to comply with the general and special controls could lead to removal of ReStore or ReWalk from the market, which
would have a material adverse effect on our business.
In March 2023, we received 510(k) clearance for the ReWalk Personal Exoskeleton with an indication for standing and
walking on level surfaces and mild slopes and ascending and descending stairs and curbs. In June 2024, we submitted a 510(k)
premarket notification for the ReWalk 7 Personal Exoskeleton, a next-generation ReWalk model, and the 510(k) is
currently
pending review by the FDA.
For more information, see “Part I, Item 1A. Risk Factors-Risks Related to Government Regulation-We are subject to
extensive governmental regulations relating to the manufacturing, labelling and marketing of our products, and a failure to
comply with such regulations could lead to withdrawal or recall of our products from the market.”
Expedited Development and Review Programs
FDA’s Breakthrough Devices Program is a voluntary program offered to manufacturers of certain medical devices and
device-led combination products
that may provide for more effective treatment or diagnosis of life-threatening or irreversibly
debilitating diseases or conditions. The goal of the program is to provide patients and health care providers with more timely
access to qualifying
devices by expediting their development, assessment and review, while preserving the statutory standards for
marketing authorization.
The program is available to medical devices that meet certain eligibility criteria, including that the device provides more
effective treatment or
diagnosis of life-threatening or irreversibly debilitating diseases or conditions, and that the device meets
one of the following criteria: (i) the device represents a breakthrough technology, (ii) no approved or cleared alternatives exist,
(iii)
the device offers significant advantages over existing approved or cleared alternatives, or (iv) the availability of the device is
in the best interest of patients. Breakthrough Device designation provides certain benefits to device developers,
including more
interactive and timely communications with FDA staff, use of post market data collection, when scientifically appropriate, to
facilitate expedited and efficient development and review of the device, opportunities for efficient and
flexible clinical study
design, and prioritized review of premarket submissions.
17
Post-Market Regulatory Requirements
After a device is cleared for marketing, numerous regulatory requirements apply. These include:
●
establishment registration and device listing;
●
development of a quality assurance system, including establishing and implementing procedures to design and manufacture devices;
●
labeling regulations that prohibit the promotion of products for unapproved or “off-label” uses and impose other restrictions on labeling;
●
FDA’s Unique Device Identification requirements that call for a unique device identifier (UDI) on device labels and packages and
submission of data to the FDA’s Global Unique Device Identification Database (GUDID);
●
medical device reporting regulations that require manufacturers to report to the FDA if a device may have caused or contributed to a
death or serious injury or malfunctioned in a way that would likely cause or contribute to a death or
serious injury if it were to recur; and
corrections and removal reporting regulations that require manufacturers report to the FDA field corrections and product recalls or
removals if undertaken to reduce a risk to health posed by the
device or to remedy a violation of the FFDCA that may present a risk to
health; and
●
post-market surveillance.
Our manufacturing processes are required to comply with the applicable portions of the FDA’s Quality System Regulation
(“QSR”) that covers the
methods and the facilities and controls for the design, manufacture, testing, production, processes,
controls, quality assurance, labeling, packaging, distribution, installation, and servicing of finished devices intended for human
use. In February
2024, the FDA issued the Quality Management System Regulation (“QMSR”) Final Rule to amend the QSR,
incorporating by reference the international standard for medical device quality management systems set by the International
Organization for
Standardization (ISO), ISO 13485:2016. The rule will become effective on February 2, 2026. Until then,
manufacturers are required to comply with the QSR. We actively maintain compliance with the FDA’s QSR, and the European
Union’s Quality
Management Systems requirements, ISO 13485:2016.
As a manufacturer, we are subject to periodic scheduled or unscheduled inspections by the FDA. If the FDA believes we
or any of our contract
manufacturers are not in compliance with the quality system requirements, or other post-market
requirements, it has significant enforcement authority. Specifically, if the FDA determines that we failed to comply with
applicable regulatory
requirements, it can take a variety of compliance or enforcement actions, which may result in any of the
following sanctions:
●
untitled letters, warning letters, fines, injunctions, consent decrees and civil penalties;
●
customer notifications or repair, replacement, or refunds;
●
recalls, withdrawals, or administrative detention or seizure of our products;
●
operating restrictions or partial suspension or total shutdown of production;
●
refusing or delaying requests for approval of pre-market approval applications relating to new products or modified products;
●
withdrawing PMA approval or reclassifying our devices;
●
refusal to grant export approvals for our products; or
●
pursuing criminal prosecution.
Any such action by the FDA would have a material adverse effect on our business. In addition, these regulatory controls,
as well as any changes in
FDA policies, can affect the time and cost associated with the development, introduction, and continued
availability of new products. Where possible, we anticipate these factors in our product development processes.
18
Regulation Outside of the U.S.
In addition to the United States regulations, we are subject to a variety of foreign regulations governing clinical trials and
commercial sales
and distribution of our products. In the E.U., medical devices are regulated by the European Union Medical
Devices Regulation (EU) 2017/745 or MDR, which became applicable on May 26, 2021, and replaced the E.U. Medical Devices
Directive 93/42/EEC,
or MDD. The MDR and its associated guidance documents and harmonized standards, govern, among
other things, device design and development, preclinical and clinical or performance testing, premarket conformity assessment,
registration,
manufacturing, labeling, claims, distribution, export and import and post-market surveillance, vigilance, and market
surveillance.
Before a device can be placed on the market in the E.U., compliance with the MDR requirements must be demonstrated
in
order to affix the CE mark to the product. The method of assessing conformity varies depending on the class of the product but
normally involves a combination of self-assessment by the manufacturer and a third-party assessment by a “Notified
Body.” This
third-party assessment may consist of an audit of the manufacturer’s quality system or specific testing of the manufacturer’s
product. The Notified Body issues a CE Certificate of Conformity to confirm successful completion of a
conformity assessment
procedure conducted in relation to the medical device and its manufacturer and their conformity with the essential requirements
provided in the MDR. Under transitional provisions provided in the MDR, medical devices that had
valid CE Certificates of
Conformity issued under the MDD prior to May 26, 2021 and that remained valid (and not withdrawn) on March 20, 2023, can
continue to be placed on the EEA market until the end of December 2027 or 2028 (depending on the
class of device), provided
the device’s manufacturer complies with certain requirements, including that there are no significant changes in the design and
intended purpose of the applicable device. After the expiry of any applicable transitional
period, only devices that have been CE
marked on the basis of the MDR may be placed on the market in the EEA. We comply with the E.U. requirements and have
received ta Notified Body Certificate of Conformity under the MDD for our ReWalk systems
which are distributed in the E.U.
This allows us to continue to apply the CE mark to our products and place them on the market throughout the E.U. during the
transition period or until we have completed an appropriate conformity assessment
procedure under the MDR. On August 2024,
we submitted our application for the MDR assessment of the ReWalk 7 Personal Exoskeleton, and the submission is currently
being reviewed by our Notified Body. The ReStore product was not planned for MDR
conformity and accordingly, we had to
cease sales of the ReStore in the EU in May 2024.
Following the U.K.’s exit from the E.U. (known as “Brexit”), the MDR does not apply in the United Kingdom (except for
Northern Ireland, which
under the Northern Ireland Protocol is bound by certain E.U. laws). The medical device legislative
framework in the United Kingdom is set out in the Medical Devices Regulations 2002, as amended. These regulations are based
on the previous medical
device directives of the E.U. but have been amended so that they function properly now the United
Kingdom is no longer part of the E.U. The Medical Devices Regulations 2002 have introduced several changes including (but not
limited to) replacing
the CE mark with a UKCA marking (although E.U. CE marks will be recognized potentially up until June
2030), requiring manufacturers outside of the United Kingdom to appoint a “UK Responsible Person” if they place devices on the
Great Britain market
and more wide-ranging device registration requirements.
Sales in other jurisdictions are subject to the foreign government regulations of the relevant jurisdiction, and in most
cases, we must obtain
approval by the appropriate regulatory authorities before we can commence clinical trials or marketing
activities in those countries. The approval process varies from country to country, and the time may be longer or shorter than that
required to
obtain a marketing authorization in the United States or the CE mark in the E.U. The requirements governing the
conduct of clinical trials, product licensing, pricing and reimbursement vary greatly from country to country.
The policies of the FDA and foreign regulatory authorities may change, and additional government regulations may be
enacted that could prevent or
delay regulatory approval of our products and could also increase the cost of regulatory compliance.
We cannot predict the likelihood, nature, or extent of adverse governmental regulation that might arise from future legislative or
administrative
action, either in the United States or abroad.
19
U.S. Anti-Kickback, False Claims and Other Healthcare Fraud and Abuse Laws
In the United States, there are federal and state anti-kickback laws that prohibit the payment or receipt of kickbacks,
bribes or other
remuneration intended to induce the purchase or recommendation of healthcare products and services. Violations
of these laws can lead to civil and criminal penalties, including exclusion from participation in federal healthcare programs.
These laws
apply to manufacturers of products, such as us, with respect to our financial relationship with hospitals, physicians
and other potential purchasers or acquirers of our products. The U.S. government has published regulations that identify “safe
harbors” or exemptions for certain practices from enforcement actions under the federal anti-kickback statute, and we will seek to
comply with the safe harbors where possible. The federal anti-kickback law also contains several statutory safe
harbor
exceptions. To qualify for a safe harbor, the activity must fit squarely within the safe harbor. Arrangements that do not meet a
safe harbor are not necessarily illegal but must be evaluated on a case-by-case basis. A person or entity may be
found to violate
the anti-kickback statute even absent actual knowledge of this statute or specific intent to violate it. In addition, the government
may assert that a claim that includes items or services resulting from a violation of the federal
anti-kickback statute constitutes a
false or fraudulent claim for purposes of the federal False Claims Act (“FCA”).
The civil FCA prohibits, among other things, any person or entity from knowingly presenting, or causing to be presented,
a false or fraudulent
claim for payment to, or approval by, the federal government, knowingly making, using, or causing to be
made or used a false record or statement material to a false or fraudulent claim to the federal government, or avoiding,
decreasing, or
concealing an obligation to pay money to the federal government. A claim includes “any request or demand” for
money or property presented to the U.S. government. The civil FCA has been used to assert liability on the basis of kickbacks
and other
improper referrals, improper use of Medicare provider or supplier numbers when detailing a provider of services,
improper promotion of off-label uses not covered by a device’s clearance or approval, and allegations as to misrepresentations
with
respect to products, contract requirements, and services rendered. In addition, private payors have been filing follow-on
lawsuits alleging fraudulent misrepresentation, although establishing liability and damages in these cases is more difficult
than
under the FCA. Intent to deceive is not required to establish liability under the civil FCA. Civil FCA actions may be brought by
the government or may be brought by private individuals on behalf of the government, called “qui tam” actions. If
the
government decides to intervene in a qui tam action and prevails in the lawsuit, the individual will share in the proceeds from any
fines or settlement funds. If the government declines to intervene, the individual may pursue the case alone.
The civil FCA
provides for treble damages and a civil penalty for each false claim, such as an invoice or pharmacy claim for reimbursement,
which can aggregate into millions of dollars. For these reasons, FCA lawsuits against biopharmaceutical and
device companies
have increased significantly in volume and breadth, leading to several substantial civil and criminal settlements, as much as $3.0
billion, regarding certain sales practices and promoting off label uses. Civil FCA liability may
further be imposed for known
Medicare or Medicaid overpayments that are not refunded within 60 days of discovering the overpayment, even if the
overpayment was not caused by a false or fraudulent act. In addition, conviction or civil judgment for
violating the FCA may
result in exclusion from federal health care programs, and suspension and debarment from government contracts, and refusal of
orders under existing government contracts.
The government may further prosecute conduct constituting a false claim under the criminal FCA. The criminal FCA
prohibits the making or
presenting of a claim to the government knowing such claim to be false, fictitious, or fraudulent and,
unlike the civil FCA, requires proof of intent to submit a false claim.
The civil monetary penalties statute is another statute under which medical device companies may potentially be subject
to enforcement. Among
other things, the civil monetary penalties statue imposes fines against any person who offers to provide
remuneration to any individual eligible for benefits under Medicare or Medicaid that the offerer knows or should know is likely
to influence
the individual to order or receive from a particular provider or supplier of any item or service reimbursable under
those programs.
The federal Health Insurance Portability and Accountability Act of 1996 (“HIPAA”) also created federal criminal statutes
that prohibit, among
other actions, knowingly and willfully executing, or attempting to execute, a scheme to defraud or to obtain,
by means of false or fraudulent pretenses, representations or promises, any of the money or property owned by, or under the
custody or
control of, a healthcare benefit program, regardless of whether the payor is public or private, in connection with the
delivery or payment for health care benefits, knowingly and willfully embezzling or stealing from a health care benefit program,
willfully obstructing a criminal investigation of a health care offense and knowingly and willfully falsifying, concealing, or
covering up by any trick or device a material fact or making any materially false statements in connection with the
delivery of, or
payment for, healthcare benefits, items, or services relating to healthcare matters. Additionally, the Patient Protection and
Affordable Care Act, as amended by the Health Care and Education Affordability Reconciliation Act, or
collectively the “ACA”,
amended the intent requirement of certain of these criminal statutes under HIPAA so that a person or entity no longer needs to
have actual knowledge of the statute, or the specific intent to violate it, to have committed a
violation.
20
The Physician Payments Sunshine Act (“Sunshine Act”) requires annual reporting, by applicable device and drug
manufacturers, of covered products,
payments, and other transfers of value to certain health care providers, and ownership and
investment interests held by physicians and their immediate family members.
Further, we may be subject to data privacy and security regulation by both the federal government and the states in which
we conduct our business.
HIPAA, as amended by the Health Information Technology for Economic and Clinical Health Act
(“HITECH”) and its respective implementing regulations imposes certain requirements on covered entities relating to the privacy,
security, and transmission
of certain individually identifiable health information, known as protected health information. Among
other things, HITECH, through its implementing regulations, makes HIPAA’s security standards and certain privacy standards
directly applicable to
business associates, defined as a person or organization, other than a member of a covered entity’s
workforce, that creates, receives, maintains, or transmits protected health information on behalf of a covered entity for a function
or activity
regulated by HIPAA. HITECH also strengthened the civil and criminal penalties that may be imposed against covered
entities, business associates, and individuals, and gave state attorneys general new authority to file civil actions for damages or
injunctions in federal courts to enforce the federal HIPAA laws and seek attorneys’ fees and costs associated with pursuing
federal civil actions. In addition, other federal and state laws may govern the privacy and security of health and other
information
in certain circumstances, many of which differ from each other in significant ways and may not be pre-empted by HIPAA, thus
complicating compliance efforts.
Many states have also adopted laws similar to each of the above federal laws, which may be broader in scope and apply to
items or services
reimbursed by any third-party payor, including commercial insurers. Certain states also require implementation
of commercial compliance programs and compliance with the medical device industry’s voluntary compliance guidelines and the
applicable
compliance guidance promulgated by the federal government, or otherwise restrict payments or the provision of other
items of value that may be made to healthcare providers and other potential referral sources; impose restrictions on marketing
practices; or require companies to track and report information related to payments, and other items of value to physicians and
other healthcare providers.
If our operations are found to be in violation of any of the laws or regulations described above or any other applicable
laws, we may be subject
to penalties or other enforcement actions, including criminal and significant civil monetary penalties,
damages, fines, disgorgement, imprisonment, exclusion from participation in government healthcare programs, corporate
integrity agreements,
suspension and debarment from government contracts, and refusal of orders under existing government
contracts, reputational harm, diminished profits and future earnings, and the curtailment or restructuring of our operations, any of
which could
adversely affect our ability to operate our business and our results of operations. Enforcement actions can be brought
by federal or state governments, or as “qui tam” actions brought by individual whistleblowers in the name of the government
under
the civil FCA if the violations are alleged to have caused the government to pay a false or fraudulent claim.
To the extent that any of our products are sold in a foreign country, we may be subject to similar foreign laws and
regulations, which may
include, for instance, applicable post-marketing requirements, including safety surveillance, anti-fraud
and abuse laws, and implementation of corporate compliance programs and reporting of payments or transfers of value to
healthcare
professionals.
Coverage and Reimbursement
The commercial success of our product candidates and our ability to commercialize any approved product candidates
successfully will depend in part
on the extent to which governmental payor programs at the federal and state levels, including
Medicare and Medicaid, private health insurers, and other third-party payors provide coverage for and establish adequate
reimbursement levels for our
products. Government authorities, private health insurers, and other organizations generally decide
which products and services they will pay for and establish reimbursement levels for healthcare. Medicare is a federally funded
program managed by
CMS through local fiscal intermediaries and carriers that administer coverage and reimbursement for
certain healthcare items and services furnished to the elderly and disabled. Medicaid is an insurance program for certain
categories of patients
whose income and assets fall below state defined levels and who are otherwise uninsured that is both
federally and state funded and managed by each state. In the United States, private health insurers and other third-party payors
often provide
reimbursement for products and services based on the level at which the government provides reimbursement
through the Medicare or Medicaid programs for such products and services.
21
In the United States, the European Union, and other potentially significant markets for our products, government
authorities and third-party
payors are increasingly attempting to limit or regulate the price of medical products and services,
particularly for new and innovative products and therapies, which often has resulted in average selling prices lower than they
would otherwise be.
In the United States, it is also common for certain government and private health plans to use coverage
determinations to leverage rebates from labelers to reduce the plans’ net costs. These restrictions and limitations influence the
purchase of
healthcare services and products and lower the realization on manufacturers’ sales of products. Third-party payors
are developing increasingly sophisticated methods of controlling healthcare costs. Third-party payors may limit coverage to
specific
therapeutic products on an approved list, or formulary, which might not include all of the FDA-approved products for a
particular indication or might impose high co-payment amounts to influence patient choice. Third-party payors also control costs
by requiring prior authorization or imposing other restrictions. Third-party payors are increasingly challenging the price and
examining the medical necessity and cost-effectiveness of medical products and services, in addition to their safety and
efficacy.
Federal programs also impose price controls through mandatory ceiling prices on purchases by federal agencies and
federally funded hospitals and
clinics. These restrictions and limitations influence the purchase of healthcare services and
products. Legislative proposals to reform healthcare or reduce costs under government programs may result in lower
reimbursement for our products or
exclusion of our products.
Private payors often rely on the lead of the governmental payors in rendering coverage and reimbursement
determinations. Therefore, achieving
favorable CMS coverage and reimbursement is usually a significant gating issue for
successful introduction of a new product.
Further, the increased emphasis on managed healthcare in the United States and on country and regional pricing and
reimbursement controls in the
European Union will put additional pressure on product pricing, reimbursement, and utilization,
which may adversely affect our future product sales and results of operations. These pressures can arise from rules and practices
of managed care
groups, competition from other products, judicial decisions and governmental laws and regulations related to
Medicare, Medicaid, and healthcare reform, and pricing in general. Patients who are prescribed treatments for their conditions
and
providers performing the prescribed services generally rely on third-party payors to reimburse all or part of the associated
healthcare costs. Sales of our product candidates will therefore depend substantially, both domestically and abroad, on the
extent
to which the costs of our products will be paid by health maintenance, managed care, and similar healthcare management
organizations, or reimbursed by government health administration authorities, such as Medicare and Medicaid, private
health
insurers, and other third-party payors.
Moreover, a payor’s decision to provide coverage for a product does not imply that an adequate reimbursement rate will
be approved or that
significant price concessions will not be required to avoid restrictive conditions. High health plan co-payment
requirements may result in patients seeking alternative therapies. Adequate third-party reimbursement may not be available to
enable us
to maintain price levels sufficient to realize an appropriate return on our investment. Legislative proposals to reform
healthcare or reduce costs under government insurance programs may result in lower reimbursement for our products or
exclusion
of our products from coverage. The cost containment measures that healthcare payors and providers are instituting and
any healthcare reform could significantly reduce our revenue from the sale of any approved product candidates.
Healthcare Reform Measures
The United States and many foreign jurisdictions have enacted or proposed legislative and regulatory changes affecting
the healthcare system. The
United States government, state legislatures and foreign governments also have shown significant
interest in implementing cost-containment programs to limit the growth of government-paid healthcare costs, including price
controls, restrictions on
reimbursement and requirements for substitution of generic products for branded prescription drugs.
The ACA substantially changed the way healthcare is financed by both governmental and private insurers, and
significantly impacts the
pharmaceutical industry. The ACA is intended to broaden access to health insurance, reduce or constrain
the growth of healthcare spending, enhance remedies against healthcare fraud and abuse, add new transparency requirements for
healthcare and
health insurance industries, impose new taxes and fees on pharmaceutical and medical device manufacturers, and
impose additional health policy reforms.
22
The ACA has been subject to challenges in the courts. In the most recent judicial challenge to the ACA, the U.S. Supreme
Court ruled on June 17,
2021 that the plaintiffs lacked standing to challenge the law as they had not alleged personal injury
traceable to the allegedly unlawful conduct. As a result, the Supreme Court did not rule on the constitutionality of the ACA or
any of its
provisions.
The Budget Control Act of 2011, among other things, created the Joint Select Committee on Deficit Reduction to
recommend proposals in spending
reductions to Congress. The Joint Select Committee did not achieve its targeted deficit
reduction of an amount greater than $1.2 trillion for the fiscal years 2012 through 2021, triggering the legislation’s automatic
reductions to several
government programs. These reductions included aggregate reductions to Medicare payments to healthcare
providers of up to 2.0% per fiscal year. The Bipartisan Budget Act of 2018 retained the federal budget “sequestration” Medicare
payment
reductions of 2% and extended it through 2031. Under the Consolidated Appropriations Acts of 2023 and 2024, the
Medicare sequester percentage in FY2032 is scheduled to be 2% from April 1, 2032, through September 30, 2032, and 0% for
October 1,
2032 through March 31, 2032 unless congressional action is taken. On January 2, 2013, the American Taxpayer Relief
Act was signed into law, which, among other things, reduced Medicare payments to several types of providers, including
hospitals,
imaging centers and cancer treatment centers, and increased the statute of limitations period for the government to
recover overpayments to providers from three to five years.
Further legislative and regulatory changes remain possible. It is unknown what form any such changes or any law would
take, and how or whether it
may affect our business in the future. We expect that changes or additions to the Medicare and
Medicaid programs, and changes stemming from other healthcare reform measures, especially with regard to healthcare access,
financing or other
legislation in individual states, could have a material adverse effect on the healthcare industry.
At the state level, legislatures may also increasingly pass legislation and implement regulations designed to control
product pricing, including
price or patient reimbursement constraints, discounts, restrictions on certain product access and
marketing cost disclosure and transparency measures.
We expect that additional federal, state, and foreign healthcare reform measures will be adopted in the future, any of
which could limit the
amounts that federal and state governments will pay for healthcare products and services, which could
result in limited coverage and reimbursement and reduced demand for our products, or additional pricing pressures.
Environmental Matters
We are subject to various environmental, health and safety laws and regulations, including those governing air emissions,
water and wastewater
discharges, noise emissions, the use, transport, management and disposal of chemicals and hazardous
materials and wastes, the import, export and registration of chemicals, and the cleanup of contaminated sites. Based on
information currently
available to us, we do not expect environmental or health and safety costs and contingencies to have a
material adverse effect on us. The operation of our business and facilities, however, entails risks in these areas. Significant
expenditures
could be required in the future to comply with environmental or health and safety laws, regulations, or
requirements.
23
In Israel, where our contract manufacturer produces our ReWalk products, businesses storing or using certain hazardous
materials
(including materials necessary for our manufacturing process) are required, pursuant to the Israeli Dangerous
Substances Law, 5753-1993, to obtain a toxin permit from the Ministry of Environmental Protection. In the U.S., where we
manufacture our
AlterG products in our Fremont, California facility, we do not utilize chemicals which require a toxic materials
license. We have a hazardous waste disposal license with the County of Alameda and dispose of our expired and empty
containers
through a process in accordance with the license.
In the European marketplace, electrical and electronic equipment and its packaging is required to comply with a number
of regulatory regimes aimed
at ensuring product safety and protecting the environment, including the Directive on Waste
Electrical and Electronic Equipment, which aims to prevent waste by encouraging reuse and recycling, and the Directive on
Restriction of Use of Certain
Hazardous Substances, which restricts the use of ten hazardous substances in electrical and
electronic products. Our products and certain components of such products “placed on the market” in the E.U. (whether or not
manufactured in the E.U.) are
subject to these and other legislative regimes. Additionally, we are required to comply with certain
laws, regulations, and directives, including the Toxic Substances Control Act in the United States and the REACH Regulation in
the E.U., governing
chemicals. These and similar laws and regulations require the testing, reporting, labelling, and registration of
certain chemicals we use and ship. We believe we comply in all material respects with applicable environmental and product
conformity
laws and regulations.
Manufacturing
Our ReWalk exoskeletons, ReStore exo-suits, and AlterG Anti-Gravity systems include off-the-shelf and custom-made
components produced to our
specifications by various third parties, for technical and cost-effectiveness. We have contracted with
Sanmina Corporation (“Sanmina”) and Cirtronics Corporation (“Cirtronics”), each a well-established contract manufacturer with
expertise in the
medical device industry, for the manufacture by Sanmina of our SCI Products at its facility in Ma’alot, Israel and,
starting in January 2025, by Cirtronics of the AlterG product at its facility in Milford, New Hampshire. Each product line is
manufactured pursuant to the same applicable set of specifications. We place our manufacturing orders with Sanmina, Cirtronics
and other suppliers pursuant to purchase orders or by providing forecasts for future requirements. We may terminate our
relationship with Cirtronics through notice at least one year prior to the expiration of the initial term or renewal term of the
contract. We may terminate our relationship with Sanmina or our other suppliers at any time upon written notice.
Either we, on
the one hand, or either Sanmina or Cirtronics, on the other hand, may terminate the respective relationship in the event of a
material breach, subject to a 30-day cure period in the case of Sanmina or a 45-day period in the case of
Cirtronics. Each
agreement with Sanmina and Cirtronics contains a limitation on liability that applies equally to us and Sanmina and Cirtronics,
respectively.
We believe that these contract manufacturing relationships with Sanmina and Cirtronics allow us to operate our business
efficiently by focusing
our internal efforts on the development and commercialization of our technology and our products and
provides us with substantial scale-up capacity. We regularly test quality on-site at each of Sanmina’s and Cirtronics’ facilities and
we obtain
full quality inspection reports. We maintain a non-disclosure agreement with each of Sanmina and Cirtronics.
We develop certain of the software components internally and license other software components that are generally
available for commercial use as
open-source software.
We manufacture products based upon internal sales forecasts. We deliver products to customers and distributors based
upon purchase orders
received, and our goal is to fulfill each customer’s order for products in regular production within two
weeks of receipt of the order.
Suppliers
We have contracted with Sanmina for the sourcing of all components and raw materials necessary for the manufacture of
our ReWalk products and
with Cirtronics for the sourcing of all components and raw materials for the manufacture of our AlterG
products, although there are instances that we purchase raw materials ourselves. Components of our products and raw materials
come from suppliers
in the United States, Europe, China, Taiwan, and Israel, and we depend on certain of these components and
raw materials, including certain electronic parts, for the manufacture of our products. To date, we have not experienced
significant
volatility in the prices of these components and raw materials. However, during the COVID-19 pandemic several
specific parts, mainly electronic parts, experienced temporary price increases which have returned to more normal levels. Such
prices are
subject to a number of factors, including purchase volumes, general economic conditions, currency exchange rates,
industry cycles, production levels, and scarcity of supply.
We believe that each of Sanmina’s and Cirtronics’ facilities, our contracted manufacturing arrangements, and our supply
arrangements are
sufficient to support our potential capacity needs for the foreseeable future.
24
Human Capital
Employees
As of December 31, 2024, we had 80 employees (including full-time and hourly employees), of whom 5 were located in
the United States, 18 were
located in Israel and 10 were located in Europe. The majority of our employees are, and have been,
engaged in sales and marketing activities. We do not employ a significant number of temporary or part time employees.
We are subject to labor laws and regulations within our locations mainly in the U.S., Germany, and Israel. These laws and
regulations principally
concern matters such as pensions, paid annual vacation, paid sick days, length of the workday and work
week, minimum wages, overtime pay, insurance for work-related accidents, severance pay and other conditions of employment.
Our employees are not
represented by a labor union. We consider our relationship with our employees to be good. To date, we
have not experienced any work stoppages.
Compensation and Benefits
We provide our employees with competitive salaries and bonuses, opportunities for equity ownership, and a robust
employment package that promotes
well-being across all aspects of our employees’ lives, including health care, retirement
planning, and paid time off. We also invest in the ongoing development of our employees through our internal training programs.
Diversity and Inclusion
We value the diversity of our employees and take pride in our commitment to diversity and inclusion across all levels of
our organizational
structure. We encourage a diversity of views and strive to create an equal opportunity workplace, including
working with managers to develop strategies for building diverse teams and promoting the advancement of employees from
diverse backgrounds.
Financial Information about Geographic Areas and Significant Customer Information
The following table sets forth the geographical breakdown of our revenue for each of the years ended December 31, 2024,
and 2023 (in thousands):
Year Ended December 31,
2024
2023
Revenue based on customer’s location:
United States
14,425
7,636
Europe
9,546
5,044
Asia-Pacific
825
387
Rest of the world
867
787
Total revenue
$
25,663 $
13,854
Additional discussion of financial information by reportable segment and geographic area and sales in excess of 10% of
total revenue to certain of
our customers is contained in Note 14 to our consolidated financial statements set forth in “Part II. Item
8. Financial Statements and Supplementary Data” of this annual report.
25
2024 Recent Developments
•
In March 2025, we announced an agreement for CorLife, to become the exclusive distributor for the ReWalk Personal Exoskeleton for
individuals
with workers' compensation claims.
•
In March 2025, we expanded our exclusive contract with MYOLYN so that we manage referrals and sales of the MyoCycle Home
product for
patients that are transitioning from clinical use to home use. This expanded contract builds upon the existing distribution
agreement, under which we manage all hospital and clinic-based sales of the MyoCycle Pro product nationwide,
as well as home use
sales for individuals with Veterans Benefits Administration and workers' compensation benefits.
•
In January 2025, Lifeward completed a registered direct offering priced $2.75 per share for gross proceeds of $5.0 million to fund
continuing commercial efforts, working capital, and general corporate purposes.
•
We completed actions to streamline our U.S. operations, including closing two U.S. facilities and reducing our headcount by a cumulative
35% since the AlterG acquisition. The actions are expected to save us approximately $3 million in
operating expenses and improve gross
margins by approximately two percentage points when the full impact is achieved.
•
We began selling the AlterG product line through our German sales organization, which we expect will result in revenue growth from a
more focused sales effort and higher margins with little incremental investment by utilizing our
existing sales and support infrastructure
in Germany.
•
We completed our near-term plans to refresh our Board of Directors. Joe Turk replaced Jeff Dykan as chairman following Mr. Dykan’s
retirement from the Board. Additionally, the Board added Mike Swinford as a new director and Bob Marshall
as a new director and
chairman of our audit committee.
•
We formally changed our name to Lifeward Ltd. from ReWalk Robotics Ltd. to complete the rebranding of the Company and reflect our
expanded mission to transform the lives of people with physical limitations or disabilities.
•
We successfully launched the latest generation of Differential Air Pressure Anti-Gravity Technology with our new NEO product line. The
NEO was engineered with a new design to allow a lower price point to make the technology more
accessible to a broader range of
customers. Since the introduction of the NEO at the end of June 2024, we have generated orders for approximately 100 units, as the NEO
is quickly becoming a growth driver for the AlterG product line.
•
We completed our FDA submission for our 7th generation ReWalk design, which will further enhance use of the system in all aspects of
daily life and further establish us as the most
advanced personal exoskeleton company in the world.
•
The CMS Home Health Rule and Medicare Pricing achieved by our efforts is in effect with a growing volume of claims approvals and
payments from our 2024 Medicare submissions.
ITEM 1A. RISK FACTORS
Our business faces significant risks. You should carefully consider all of the information set forth in this annual report
and
in our other filings with the SEC, including the following risk factors which we face and which are faced by our industry. Our
business, financial condition and results of operations could be materially and adversely affected by any of these risks.
In that
event, the trading price of our ordinary shares would likely decline and you might lose all or part of your investment. This report
also contains forward-looking statements that involve risks and uncertainties. Our results could materially
differ from those
anticipated in these forward-looking statements, as a result of certain factors including the risks described below and elsewhere
in this report and our other SEC filings. See also “Special Note Regarding Forward-Looking
Statements” on page (ii).
26
Risks Related to Our Business and Our Industry
We have concluded that there is substantial doubt as to our ability to continue as a going
concern.
As of December 31, 2024, we had an accumulated deficit in the total amount of approximately $264.8 million and
anticipate further losses in the development of our business. Those factors raise substantial doubt about our ability to continue as
a going concern. Our ability to continue as a going concern depends upon our obtaining the necessary financing to
meet our
obligations and timely repay our liabilities arising from normal business operations. The financial statements have been prepared
assuming that we will continue to operate as a going concern, which contemplates the realization of assets
and the satisfaction of
liabilities in the normal course of business. Management concluded that substantial doubt about our ability to continue as a going
concern exists as of the date of the issuance of these financial statements. Our auditors
also included an explanatory paragraph to
their audit opinion relating to our accompanying consolidated financial statements for the fiscal year ended December 31, 2024
regarding the substantial doubt about our ability to continue as a going
concern. If we are unable to secure additional capital, we
may be required to take additional measures to reduce costs in order to conserve our cash in amounts sufficient to sustain
operations and meet our obligations. If we become insolvent,
investors in our securities may lose the entire value of their
investment in our business. The accompanying financial statements do not include any adjustments that may be necessary should
we be unable to continue as a going concern, and it is
not possible for us to predict at this time the potential success of our
business.
We may fail to realize the benefits expected from our acquisition of AlterG, which could adversely affect the price of our
ordinary shares.
As discussed above in “Part I. Item 1. Business - Overview”, on August 11, 2023, we completed the acquisition of AlterG
which became an indirect
and wholly-owned subsidiary of the Company.
The anticipated benefits from our acquisition of AlterG are based on projections and assumptions about the combined
businesses of ReWalk and
AlterG, which may not materialize as expected or which may prove to be inaccurate. The value of our
ordinary shares could be adversely affected if we are unable to realize the anticipated benefits from the acquisition on a timely
basis or at all.
Achieving the benefits of the acquisition will depend, in part, on our ability to integrate the business, operations
and products of AlterG successfully and efficiently with our business. The process of integrating the operations of ReWalk and
AlterG could encounter unexpected costs and delays, which include: the loss of key personnel; the loss of key customers; the loss
of key suppliers; inability to properly identify, acquire or obtained required regulatory approvals; and unanticipated
issues in
integrating sales, marketing and administrative functions. In addition, the acquired AlterG business, products and technologies
may not achieve anticipated revenues and income growth.
Further, the integration of AlterG may involve a number of additional risks, including diversion of management’s
attention away from the rest of
the business, which could adversely affect our results of operations. In addition, our failure to
identify or accurately assess the magnitude of certain liabilities we assumed in the acquisition could result in unexpected
litigation or regulatory
exposure, unfavorable accounting charges, unexpected increases in taxes due, a loss of anticipated tax
benefits or other adverse effects on our business, operating results or financial condition. If we do not realize the expected
benefits or
synergies of the acquisition, such as revenue gains or cost reductions, there could be a material adverse effect on our
business, results of operations, and financial condition.
Global, regional, and local economic weakness and uncertainty could adversely affect our demand for our products and
services
and our business and financial performance.
Our business and financial performance depends on worldwide economic conditions and the demand for our products and
services in the markets in
which we compete. Ongoing economic weakness, including an economic slowdown or recession,
uncertainty in markets throughout the world and other adverse economic conditions, including inflation, changes in monetary
policy and interest rate
fluctuations, have resulted, and may result in the future, in decreased demand for our products and
services and increased expenses and difficulty in managing inventory levels and accurately forecasting revenue, gross margin,
cash flows and
expenses. Ongoing U.S. federal government spending limits may continue to reduce demand for our products and
services from organizations that receive funding from the U.S. government and could negatively affect macroeconomic
conditions in the
United States, which could further reduce demand for our products and services.
Prolonged or more severe economic weakness and uncertainty could also cause our expenses to vary materially from our
expectations. Any financial
turmoil affecting the banking system and financial markets or any significant financial services
institution failures could negatively impact our treasury operations, as the financial condition of such parties may deteriorate
rapidly and without
notice. Poor financial performance of asset markets and the adverse effects of fluctuating currency exchange
rates could lead to higher pension and post-retirement benefit expenses. Interest and other expenses could vary materially from
expectations depending on changes in interest rates, borrowing costs, currency exchange rates, costs of hedging activities and the
fair value of derivative instruments. Economic downturns also may lead to future restructuring actions and associated
expenses.
We may not have sufficient funds to meet certain future operating needs or capital requirements, which could impair our
efforts to develop and commercialize existing and new products, and as a result, we may in the future consider one or more
capital-raising transactions, including future equity or debt financings, strategic transactions, or borrowings which may
also
further dilute our shareholders or place us under restrictive covenants limiting our ability to operate freely.
We intend to finance our business by close management of our operating expenses until we reach profitable operation
using existing cash on hand, issuances of equity and/or debt securities, and other future public or private issuances of securities,
cash exercised of outstanding warrants, or through a combination of the foregoing, though we may also consider
additional
capital raising alternatives, such as entering into a credit facility, if the foregoing alternatives are not available to us or
unavailable on reasonable terms. We had cash and cash equivalents of $6.7 million as of December 31, 2024,
and raised
approximately $5.0 million in January 2025 through a registered direct offering of our ordinary shares. However, we will need to
seek additional sources of financing if we require more funds than anticipated during the next 12 months
or in later periods.
27
Raising additional capital in the public markets could also entail certain downsides. Although we are currently eligible to
use our Form S-3, we
are limited to selling no more than one-third of our unaffiliated market capitalization, or public float, on
Form S-3 in a 12-month period unless our public float rises above $75 million. During the twelve-month period ended March 7,
2025, we had
sold a total of $5.0 million in offerings pursuant to shelf registration statements which will limit our capacity to sell
our ordinary shares under our current shelf registration statement. For more information on our inability to use Form S-3, see
“Part II. Item 2, Management’s Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital
Resources—Equity Raises” below. Additionally, due to these limitations on our use of Form S-3, we may be required to seek
other methods for access to capital, such as a registration statement on Form S-1. The preparation of a registration statement on
Form S-1 is, and has in the past, been more time-consuming and costly than using Form S-3. We may also conduct
fundraising
transactions in the form of private placements, potentially with registration rights or priced at a discount to the market value of
our ordinary shares, which could require shareholder approval under the rules of The Nasdaq Stock Market
LLC (“Nasdaq”), or
other equity raise transactions such as equity lines of credit. In addition to entailing increased capital costs, any such transactions
have historically resulted in and could result in substantial dilution of our shareholders’
interests and may also transfer control to
a new investor or diminish the value of an investment in our ordinary shares.
We may also need to pursue strategic transactions, such as joint ventures, in-licensing transactions, or the sale of our
business, or all, or
substantially all, of our assets if our financial stability is uncertain, and we are unable to raise additional capital
effectively. These strategic transactions have in the past and could in the future require significant management attention,
disrupt
our business, adversely affect our financial results, be unsuccessful or fail to achieve the desired results.
Overall, if we cannot raise the required funds, or cannot raise them on terms acceptable to us or investors, we may
be
forced to curtail substantially our current operations or cease operations altogether. Further, external perceptions regarding our
ability to continue as a going concern may make it more difficult for us to obtain financing for the
continuation of our operations
or require us to obtain financing on terms that are more favorable to investors, and could result in the loss of confidence by
investors and suppliers. As such, our failure to continue as a going concern could harm
our business, operating results and
financial position and severely affect the value of your investment.
We may not fully realize the anticipated positive impacts to future financial results from our streamlining efforts.
We began streamlining our U.S. operations, including closing two U.S. facilities to complete the integration following the
acquisition of AlterG.
As a result of the organizational changes, we reduced our total headcount by greater than 35% since the
closing of the AlterG acquisition. Key functions located at the affected facilities were integrated into the operations of the
Marlborough,
Massachusetts facility, and manufacturing of the AlterG Anti-Gravity Systems was assumed by Cirtronics
Corporation, a nationally recognized contract manufacturer specializing in the manufacture of precision medical devices and
instrumentation. We
estimate that such consolidation will save our company approximately $3 million in operating expenses and
improve gross margins when the full impact is achieved, which we expect to contribute to our goal of reducing costs and
achieving
profitability. Our ability to achieve the anticipated cost savings and other benefits from such streamlining efforts is
subject to many estimates and assumptions and may vary materially based on factors such as market conditions and the effect of
our streamlining efforts on our work force. These estimates and assumptions are subject to significant economic, competitive and
other uncertainties, some of which are beyond our control. We cannot assure that we will fully realize the anticipated
positive
impacts to future financial results from our current or future streamlining efforts. If our estimates and assumptions are incorrect
or if other unforeseen events occur, we may not achieve the cost savings expected from such streamlining,
and our business,
financial condition and results of operations could be materially adversely affected.
We face economic and political risks associated with doing business in Taiwan, particularly due to the geopolitical tension
between Taiwan and China, and in Russia that could negatively affect our business and hence the value of your investment.
Currently, we rely on third party suppliers in Taiwan for a portion of the components we use in our AlterG products.
Accordingly, our
business, financial condition and results of operations and the market price of our securities may be affected by
changes in governmental policies, taxation, growth rate, inflation rate or interest rates and by social instability and diplomatic and
social developments in or affecting Taiwan. In particular, the unique political status of Taiwan and its internal political movement
cause sustained tension between China and Taiwan. Past developments related to the interactions between China and
Taiwan,
especially in relation to trade activities such as bans on exports of goods from time to time, have on occasions depressed the
transactions and business operations of certain Taiwanese companies and overall economic environment. We cannot
predict
whether there will be escalation of the tensions between China and Taiwan, which would lead to new bans or tariffs on exports or
even conflict. Any conflict which threatens the military, political or economic stability in Taiwan could have
a material adverse
effect on our current or future business and financial conditions and results of operations.
28
In addition, we also sell our AlterG products to a distributor in Russia. The current invasion of Ukraine by Russia has
escalated tensions
among the United States, the North Atlantic Treaty Organization (“NATO”) and Russia. The United States and
other NATO member states, as well as non-member states, have announced sanctions against Russia and certain Russian banks,
enterprises and
individuals. AlterG prior to the acquisition, and Lifeward subsequent to the acquisition, has remained in
compliance with these sanctions by obtaining export licenses for each shipment to our distributor that serves Russia. These and
any future
additional sanctions and any resulting conflict between Russia, the United States and NATO countries could have an
adverse impact on our current operations.
Further, such invasion, ongoing military conflict, resulting sanctions and related countermeasures by NATO states, the
United States and other
countries are likely to lead to market disruptions, including significant volatility in commodity prices,
credit and capital markets, as well as supply chain interruptions for equipment, which could have an adverse impact on our
operations and
financial performance.
If we fail to meet the requirements for continued listing on the Nasdaq Capital Market, our ordinary shares could be delisted
from trading, which would decrease the liquidity of our ordinary shares and our ability to raise additional capital.
In the past, we have received deficiency letters from Nasdaq as a consequence of our failure to satisfy Nasdaq’s continued
listing requirements.
Although we have been able to regain compliance with the listing requirements within the manner and time
periods prescribed by Nasdaq in the past, there can be no assurance that we will be able to maintain compliance with the
Nasdaq continued
listing requirements in the future or regain compliance with respect to any future deficiencies. If we fail to
maintain compliance with the applicable continued listing requirements in the future and Nasdaq determines to delist our
ordinary shares,
the delisting could adversely affect the market price and liquidity of our ordinary shares, reduce our ability to
raise additional capital and result in operational challenges and damage to investor relations and market reputation.
Any delisting determination could seriously decrease or eliminate the value of an investment in our ordinary shares and
other securities linked to our ordinary shares. While
an alternative listing on an over-the-counter exchange could maintain some
degree of a market in our ordinary shares, we could face substantial material adverse consequences, including, but not limited to,
the following: limited availability for
market quotations for our ordinary shares; reduced liquidity with respect to our ordinary
shares; a determination that our ordinary shares are “penny stock” under SEC rules, subjecting brokers trading our ordinary
shares to more stringent rules
on disclosure and the class of investors to which the broker may sell the ordinary shares; limited
news and analyst coverage, in part due to the “penny stock” rules; decreased ability to issue additional securities or obtain
additional financing
in the future; and potential breaches under or terminations of our agreements with current or prospective
large shareholders, strategic investors and banks. The perception among investors that we are at heightened risk of delisting could
also
negatively affect the market price of our securities and trading volume of our ordinary shares.
Our future growth and operating results will depend on our ability to develop, receive regulatory clearance for and
commercialize new products and penetrate new product and geographic markets.
We are currently engaged in research and development efforts to address the needs of patients with mobility
impairments
besides paraplegia, such as stroke, and, in the future, we may engage in efforts to address these needs in patients with other
conditions such as multiple sclerosis, cerebral palsy, Parkinson’s disease and elderly assistance. In 2019,
we commercialized our
first product for stroke patients, the ReStore Exo-Suit. We continue to sell the ReStore in the US but ceased sales in the EU in
May 2024. For more information, see “Part, Item 1. Business—ReStore Products” above. While our
Collaboration Agreement
with Harvard for the design, research and develop lightweight exoskeleton system technologies for lower limb disabilities
intended to treat stroke, multiple sclerosis, mobility limitations for the elderly and other medical
applications successfully
concluded on March 31, 2022, Harvard has licensed to us certain of its intellectual property relating to lightweight exoskeleton
system technologies for lower limb disabilities. We are obligated to use commercially
reasonable efforts to develop products
under the license in accordance with an agreed-upon development plan and to introduce and market such products commercially.
29
We expect that a portion of our revenue will be derived, in the next few years, from the ReStore Exo-Suit product, other
new products utilizing
DAP, and, in later years, if we choose to advance the current designs, from other potential new products,
such as ReBoot, a home use device for stroke patients, or new products aimed at addressing other medical indications which
affect the ability
to walk, including multiple sclerosis, cerebral palsy, Parkinson’s disease and elderly assistance. As such, our
future results will depend on our ability to successfully develop and commercialize such new products and to penetrate our
targeted
markets with our existing ReStore product in larger scale than we have done to date. We cannot ensure that we will be
able to introduce new products, products currently under development or products contemplated for future development for
additional indications in a timely manner, or at all, as it depends on our available resources to fund such projects, as well as our
ability to conduct clinical trials and testing. While we received governmental clearance to market our ReStore
product on the
anticipated timetable in 2019, obtaining clearance for any other products we may develop could be an extensive, costly, and time-
consuming process, which could delay any planned commercialization timelines. For more information on
the clearance
processes for our products, see “Part I, Item 1. Business—Government Regulation” above.
Harvard may terminate its License Agreement with us if we fail to maintain the requisite insurance or become insolvent.
Any such termination of
this aspect of the collaboration with Harvard could impair our research and development efforts into
lightweight soft suit exoskeleton system technologies for lower limb disabilities such as the ReBoot device which is intended to
be used at home by
people who suffered a stroke. In addition, we may not be able to clinically demonstrate the medical benefits
of our products for new indications. We have limited clinical data demonstrating the benefits of our products and we might not be
able to
support the economic benefits our products have for our potential customers. We may also be unable to gain necessary
regulatory clearances or approvals to enable us to market new products for additional indications or the regulatory process may
be
more costly and time-consuming than expected, which could adversely impact us given our cash position and ongoing capital
requirements.
Even if we are successful in the design and development of new products, our growth and results of operations will
depend on our ability to
penetrate new markets and gain acceptance and reimbursement coverage in non-SCI markets such as the
stroke rehabilitation market, and, in the longer term, the home use device market for stroke-caused lower limb disability, multiple
sclerosis,
elderly assistance and cerebral palsy patients. We may not be able to gain such market acceptance and coverage for
these indications in a timely manner, or at all.
While our new products currently under development will share some aspects of the core technology platform of our
current products, their design
features and components may differ from our current products. Accordingly, these products will
also be subject to the risks described in the risk factor immediately below entitled “We rely on sales of our ReWalk Personal
Exoskeletons, AlterG
Anti-Gravity systems, and ReStore Exo-Suits and related service contracts and extended warranties for our
revenue. We may not be able to achieve or maintain market acceptance of our ReWalk, AlterG, or ReStore products, or to
generate sufficient
revenue from these current and future products to sustain our operations.” To the extent we are unable to
successfully develop and commercialize products beyond our existing commercial product portfolio, we will not meet our
operating and financial
objectives.
We rely on sales of our ReWalk Personal Exoskeletons, AlterG Anti-Gravity systems, and MyoCycle
FES cycles and related
service contracts and extended warranties for our revenue. We may not be able to achieve or maintain market acceptance of
our ReWalk, AlterG, or MyoCycle products or to generate sufficient revenue from these current and
future products to sustain
our operations.
We currently rely, and expect in the future to rely, on sales of our ReWalk Personal Exoskeletons, AlterG
Anti-Gravity
systems, MyoCycle FES cycles, and related consumables, services, and extended warranties for our revenue. We began
marketing the ReStore lightweight soft exo-suit in 2019 in the United States and the E.U. (following the receipt of FDA
clearance
and CE mark ) to support mobility for individuals suffering from other lower limb disabilities. We ceased sales of the ReStore in
the EU in May 2024. Several factors could negatively affect our ability to achieve and maintain market
acceptance of our
ReWalk, AlterG, or ReStore systems, which could in turn materially impair our business, financial condition, and operating
results, as follows:
•
ReWalk. We have sold a limited number of ReWalk systems, and market acceptance and adoption depend on educating people
with limited upright
mobility and health care providers as to the distinct features, ease-of-use, positive lifestyle impact, and other benefits of ReWalk compared to
alternative technologies. ReWalk may not be perceived to have sufficient
potential benefits compared with these alternatives. Users may also
choose other alternatives due to disadvantages of ReWalk, including the time it takes for a user to put on the device, the slower pace of ReWalk
compared to a wheelchair,
the weight of ReWalk when carried, which makes it more burdensome for a companion to transport than a wheelchair,
the required training, and the requirement that users be accompanied by a trained companion. Also, we believe that
healthcare providers tend to be
slow to change their medical treatment practices because of perceived liability risks arising from the use of new products and the uncertainty of
third-party reimbursement. Accordingly, healthcare providers
may not recommend ReWalk until there is sufficient support for the device to
convince them to alter the treatment methods they typically recommend, such as expanded reimbursement coverage by payors, and/or
recommendations by prominent
healthcare providers or other key opinion leaders in the spinal cord injury community that ReWalk is effective in
providing identifiable immediate and long-term health benefits.
30
In the United States, many private third-party payors use coverage decisions and payment amounts determined by CMS as
guidelines in setting their
coverage and reimbursement policies. In July 2020, CMS issued a Healthcare Common
Procedure Coding System Level II Code for ReWalk Personal Exoskeleton. These codes are used to identify medical
products and supplies and to facilitate insurance
claim submissions and processing for these items. On November 1, 2023,
CMS issued Calendar Year 2024 Home Health Prospective Payment System Rule CMS-1780, which explicitly included
exoskeletons within a Medicare brace benefit category. The rule
went into effect on January 1, 2024. However, even with
a positive coverage and reimbursement response from CMS regarding a product of ours, future action by CMS or other
government agencies may diminish possible payments to clinicians, outpatient
centers and/or hospitals that provide
training to the patients so that they can operate the ReWalk Personal Exoskeletons satisfactorily before they take them
home, which would discourage access to training sites to prospective users of ReWalk
Personal Exoskeletons.
Additionally, any decision by CMS regarding reimbursement could influence other payors, including private insurers. If
CMS declines to provide for reimbursements of our products, or if its reimbursement price is lower than
that of other
payors, our products may not be reimbursed at a cost-effective level or at all. Those private third-party payors that do not
follow the Medicare guidelines may adopt different coverage and reimbursement policies for purchase of our
products or
their use in a hospital or rehabilitative setting. In addition, we expect that the purchase of ReWalk Rehabilitation
Exoskeleton systems and the ReStore system, as it is currently being sold for use in rehabilitative settings, will
require the
approval of senior management at hospitals or rehabilitation facilities, inclusion in the hospitals’ or rehabilitation
facilities’ budget process for capital expenditures, and in the case of ReWalk Personal Exoskeleton, fundraising, and
financial planning or assistance.
•
AlterG. The AlterG Anti-Gravity system has broad clinical utility for treating a wide variety of lower extremity
conditions where partial
displacement of a patient’s weight can enable exercise which facilitates healing and recovery of improved function. The potential of the AlterG
Anti-Gravity systems to achieve greater penetration of the
addressable market of rehabilitation hospitals, clinics, and sports medicine practices
will depend upon the continued expansion of conditions for which clinicians utilize the AlterG and the ability for greater numbers of these
facilities
to afford the initial capital outlay for these devices. In 2024 we introduced the AlterG NEO, a new, lower-cost AlterG system, which we
believe is more affordable for smaller, independent rehabilitation clinics. However, there can be no
assurance that the introduction of this product
can expand the size of the addressable market or will not reduce the sales of the existing, higher-priced models.
•
ReStore. The ReStore system is designed to provide advantages to stroke rehabilitation clinics and therapists as compared
to other traditional
therapies and devices by minimizing setup time, improving patients’ clinical results during therapy, supplying real-time analytics to optimize
session productivity, and generating ongoing data reports to assist with
tracking patient progress Since the ReStore device is currently only
indicated for use in the rehabilitative clinical setting, its market reception will depend heavily on our ability to demonstrate to clinics and
therapists the systemic
and economic benefits of using the ReStore device, its clinical advantage when compared to other devices or manual
therapy, the functionality of the device for a significant portion of the patients that they treat and the overall
advantages that the device provides to
their patients compared to other technologies. Because the ReStore system is only indicated for use in a clinical setting and we received FDA
approval and CE mark in 2019 (as discussed above, we are
no longer selling the ReStore in the EU), close in time to the start of the COVID-19
pandemic, the overall sales of the system have been lower than originally anticipated, as many healthcare providers and rehabilitation centers have
shifted focus from the clinical setting to at-home therapies and are generally less open for introduction of new technologies such as the ReStore.
31
As a general matter, achieving and maintaining market acceptance of our current or future products could be negatively
impacted by many other
factors, including, but not limited to the following: contribution to death or serious injury or
malfunction, results of clinical studies relating to our or similar products; claims that our products, or any of their components,
infringe on patent
or other intellectual property rights of third parties; our ability to support financially and leverage our sales,
marketing and training infrastructure, as well as our level of research and development efforts; our ability to enhance and broaden
our research and development efforts and product offerings in response to the evolving demands of people with paraplegia and
lower limb disability and healthcare providers; our estimates regarding our current or future addressable market; perceived
risks
associated with the use of our products or similar products or technologies; the introduction of new competitive products or
greater acceptance of competitive products; adverse regulatory or legal actions relating to our products or similar
products or
technologies; and problems arising from the outsourcing of our manufacturing capabilities, or our existing manufacturing and
supply relationships. Any or all of these factors could materially and negatively impact our business,
financial condition and
operating results.
The market for medical exoskeletons, including soft suit devices, remains relatively new and unproven, and important
assumptions about the potential market for our current and future products may be inaccurate.
The market for medical exoskeletons, including lightweight exo-suit devices, remains relatively new and unproven.
Accordingly, it is difficult to
predict the future size and rate of growth of the market. We cannot be certain whether the market
will continue to develop or if medical exoskeletons will achieve and sustain a level of market acceptance and demand sufficient
for us to continue to
generate revenue and achieve profitability.
We obtained FDA de novo authorization for our ReWalk Personal Exoskeleton device in June 2014. FDA subsequently
cleared 510(k) premarket
notifications for modifications to the ReWalk, including for use of the ReWalk on curbs and stairs. This
marketing authorization permits us to market the device for use by individuals with spinal cord injury at levels T7 to L5 and for
use by
individuals in rehabilitation institutions with spinal cord injury at levels T4 to T6. We obtained FDA clearance for our
ReStore system in June 2019. This clearance permits us to market the device to be used to assist ambulatory functions in
rehabilitation institutions under supervision of a trained therapist for people with hemiplegia or hemiparesis due to stroke who
can ambulate at least 1.5 meters (5 feet) with no more than minimal to moderate levels of assistance.
Future products for those with paraplegia or other mobility impairments or spinal cord injuries may have the same or
other restrictions.
Our business strategy is based, in part, on our estimates of the number of individuals with physical limitations and
disability and considers the
occurrence of spinal cord injuries, strokes, lower-extremity orthopedic injury or surgery, neurological
disease, and obesity in our target markets, and the percentage of those groups that would be able to use our current and future
products.
Limited sources exist to obtain reliable market data with respect to the number of mobility-impaired individuals and the
incurrence of spinal cord injuries and strokes in our target markets. In addition, there are no third-party reports or studies
regarding what percentage of those with limited mobility and/or spinal cord injuries would be able to use exoskeletons, in
general, or our current or planned future products, in particular. Our assumptions may be inaccurate and may change.
The NSCISC estimates according to its 2024 SCI Data Sheet that there are 305,000 people in the United States living with
SCI, with an annual
incidence of approximately 18,000 new cases per year. Based on information from the 2023 annual report
published by the NSCISC, 40% of the total U.S. population of SCI patients suffered injuries between levels T4 and L5. Four
published ReWalk
trials with respect to such eligible SCI patients had an aggregate screening acceptance rate of 50% considering
all current FDA limitations, resulting in an estimated 20% of the total population of SCI patients being qualified candidates for
current ReWalk products under its medical labeling criteria. There may be other permanent or short-term factors that affect the
market size such as the ability to participate in the training program, the ability to use the device in the user’s
current home
environment as well as available companion support. With regards to our ReStore product for stroke rehabilitation, as the
indication of use is currently in rehabilitation clinics our target market is based on the number of current and
future clinics who
treat stroke patients. Although there are thousands of inpatient, outpatient and rehabilitation clinics providing therapy in the U.S.
for example, we currently see that only a limited portion of the clinics have decided to
include ReStore in their stroke rehab
program. For more information on our expectations regarding these plans, see “—Our future growth and operating results will
depend on our ability to develop, receive regulatory clearance for and commercialize
new products and penetrate new product
and geographic markets” below. For more information regarding the potential market for future products, including our
lightweight soft suit exoskeleton, see “Part I, Item 1. Business—ReWalk Personal and ReWalk
Rehabilitation Products—Market
Opportunity” above.
32
We cannot assure you that our estimate regarding our current products is accurate or that our estimate regarding future
products will remain the
same. FDA or CE mark clearance for such products, if received at all, may contain different limitations
from the ones the FDA or E.U. has placed on the devices we currently market for paraplegia. If our estimates of our current or
future
addressable market are incorrect, our business may not develop as we expect, and the price of our securities may suffer.
We may fail to secure or maintain adequate insurance coverage or reimbursement for our products by third-party payors,
which
risk may be heightened if insurers find the products to be investigational or experimental or if new government
regulations change existing reimbursement policies. Additionally, such coverage or reimbursement, even if maintained, may
not produce
revenue that are high enough to allow us to sell our products profitably.
We expect that in the future a significant source of payment for ReWalk systems will be private insurance plans and
managed care programs,
government programs such as Medicare, the VHA, workers’ compensation plans, and other third-party
payors.
In December 2015, the VHA issued a national reimbursement policy for the ReWalk system, which entails the evaluation,
training and procurement of
ReWalk Personal Exoskeleton systems for all qualifying veterans across the United States.
Additionally, in September 2017, BARMER signed a confirmation and letter of agreement regarding the provision of ReWalk
systems for all qualifying
beneficiaries and the German national social accident insurance provider DGUV indicated that its
member payors will approve the supply of exoskeleton systems for qualifying beneficiaries on a case-by-case basis. In February
2025, we finalized an
agreement with BARMER to formalize the reimbursement process for the provision of ReWalk
exoskeletons to medically eligible beneficiaries. However, no broad uniform policy of coverage and reimbursement for electronic
exoskeleton medical technology
exists among third-party payors in the United States, although reimbursement may be achieved
on a case-by-case basis. To date, payments for our products, which are largely for our ReWalk systems, have been made primarily
through case-by-case
determinations by third-party payors (including several private insurers in the United States), by self-payors
and, to a lesser extent, through the use of funds from insurance and/or accident settlements.
Generally, private insurance companies in the United States do not cover or provide reimbursement for any medical
exoskeleton products for
personal use, including ReWalk Personal Exoskeleton, and may ultimately provide no coverage at all.
Additionally, there is limited clinical data related to the ReWalk and ReStore systems, and third-party payors may consider use of
them to be
experimental and therefore refuse to cover any or all of them. Additionally, the majority of independent medical
review decisions to date made following the denial of ReWalk coverage have determined that ReWalk is experimental and/or
investigational, citing a lack of clinical data.
As described above, in the United States, many private third-party payors use coverage
decisions and payment amounts
determined by CMS as guidelines in setting their coverage and reimbursement policies. On November 1, 2023, CMS issued
Calendar Year 2024 Home Health Prospective Payment System Rule CMS-1780, which explicitly included
exoskeletons within a
Medicare brace benefit category, effective January 1, 2024. On April 11, 2024, CMS revised its April 2024 DMEPOS Fee
Schedule to include a final lump-sum Medicare purchase fee schedule amount for personal exoskeletons (HCPCS
code K1007)
with an established rate of $91,032. The final payment determination was made by CMS by applying a “gap filling” process,
which was used in light of CMS determining that the code describing the technology has no fee schedule pricing
history and that
lower extremity exoskeletons incorporate “revolutionary features” that cannot be described by or considered comparable to any
other existing code or combination of codes. As part of gap-filling, CMS utilizes verifiable supplier
or commercial pricing
information and adjusts this pricing information according to a deflation and update factor methodology. In applying this formula
to the K1007 code describing the ReWalk Personal Exoskeleton, CMS says that it calculated this
final payment amount by
averaging pricing information for exoskeleton devices from Lifeward and other manufacturers.
33
However, even with a positive coverage and reimbursement response from CMS regarding a product of ours, future action
by CMS or other government
agencies may diminish possible payments to physicians, outpatient centers and/or hospitals that
purchase our products for use by their patients and possible payments to individuals who purchase the ReWalk Personal
Exoskeleton for their own use.
Additionally, a decision by CMS to provide reimbursement could influence other payors,
including private insurers. If CMS declines to provide for reimbursements of our products or if its reimbursement price is lower
than that of other payors, our
products may not be reimbursed at a cost-effective level or at all. Those private third-party payors
that do not follow the Medicare guidelines may adopt different coverage and reimbursement policies for purchase of our products
or their use in a
hospital or rehabilitative setting. In addition, we expect that the purchase of ReWalk Rehabilitation Exoskeleton
systems and the ReStore system, as it is currently being sold for use in rehabilitative settings, will require the approval of senior
management at hospitals or rehabilitation facilities, inclusion in the hospitals’ or rehabilitation facilities’ budget process for
capital expenditures, and in the case of ReWalk Personal Exoskeleton, fundraising, and financial planning or
assistance.
Third-party payors are developing increasingly sophisticated methods of controlling healthcare costs. These cost control
methods include
prospective payment systems, capitated rates, benefit redesigns and an exploration of other cost-effective
methods of delivering healthcare. These cost control methods potentially limit the amount that healthcare providers may be
willing to pay for
electronic exoskeleton medical technology if they provide coverage at all. We may be unable to sell our
products on a profitable basis if third-party payors deny coverage or provide insufficient levels of reimbursement.
Future legislation could result in modifications to the existing public and private health care insurance systems that would
have a material
adverse effect on the reimbursement policies discussed above. If enacted and implemented, any measures to
restrict health care spending could result in decreased revenue from our products and decrease potential returns from our research
and
development initiatives.
Defects in our products or the software that drives them could adversely affect the results of our operations.
The design, manufacture and marketing of our products involve certain inherent risks. Manufacturing or design defects,
unanticipated use of
ReWalk, ReStore, or AlterG, or inadequate disclosure of risks relating to the use of our products can lead to
injury or other adverse events. In addition, because the manufacturing of some of our products is outsourced to Sanmina, the
original
equipment manufacturer of such products, we may not be aware of manufacturing defects that could occur. Such adverse
events could lead to recalls or safety alerts relating to those products (either voluntary or required by the FDA or similar
governmental authorities in other countries), and could result, in certain cases, in the removal of our products from the market. A
recall could result in significant costs. To the extent any manufacturing defect occurs, our agreement with Sanmina
contains a
limitation on Sanmina’s liability, and therefore we could be required to incur the majority of related costs. Product defects or
recalls could also result in our inability to profitably grow our business due to parts shortages, increased
field service demand,
and inventory shortages, and the resulting negative publicity, customer dissatisfaction, damage to our reputation or, in some
circumstances, delays in new product clearances or approvals.
When an exoskeleton is used by a paralyzed individual to walk, the individual relies completely on the exoskeleton to
hold him or her upright.
Between 2013 and 2021, we submitted medical device reports (“MDRs”) to the FDA (and equivalent
authorities outside of the United States) relating to reports of falls and fractures of individuals using the ReWalk Personal
Exoskeleton system. We
conducted a voluntary correction related to certain use instructions in the device’s labeling, which the
FDA classified as a Class II recall. The recall was closed in November 2019, and the FDA cleared our 510(k) containing revised
instructions for
use in May 2020. Since that time, we have submitted seven further MDRs.
In addition, our products incorporate sophisticated computer software and hardware. Complex software frequently
contains errors, especially when
first introduced. Our software may experience errors or performance problems in the future. If
any part of our product’s hardware or software were to fail, the user could experience death or serious injury. For example, in
2021 ReWalk submitted
medical device reports to the FDA and medical device vigilance reports to the European regulatory
authorities and initiated a correction in response to two complaints regarding battery thermal runaway events. The correction that
includes
clarification of previous instructions and additional information on battery operation and storage is closed in Europe and
in the United States. ReWalk has separately initiated a design project to improve power management and battery operation
during
charge and discharge, and this project remains in process. Additionally, users may not use or maintain our products in accordance
with safety, storage, and training protocols, which could enhance the risk of death or injury. Any such
occurrence could cause
delay in market acceptance of our products, damage to our reputation, the need for additional regulatory filings, product recalls,
increased service and warranty costs, product liability claims, and loss of revenue relating
to hardware or software defects.
34
The medical device industry has historically been subject to extensive litigation over product liability claims. We have
been and anticipate that
as part of our ordinary course of business we may be subject to product liability claims alleging defects
in the design, manufacture, or labeling of any of our products which has resulted in an injury or death. A product liability claim,
regardless
of its merit or eventual outcome, could result in significant legal defense costs and high punitive damage payments.
Although we maintain product liability insurance, the coverage is subject to deductibles and limitations, and may not be adequate
to cover future claims. Additionally, we may be unable to maintain our existing product liability insurance in the future at
satisfactory rates or adequate amounts. Any alleged defect that has resulted in an adverse event involving our products
could
result in future voluntary corrective actions, such as recalls or customer letters, or in an FDA enforcement action, such as a
mandatory recall, notification to healthcare professionals and users, warning letter, seizure, injunction or import
alert. In addition,
failure to report such adverse events to appropriate government authorities on a timely basis, or at all, could result in enforcement
action against us. Any action, whether voluntary or involuntary, as well as defending
ourselves in a lawsuit, will require financial
resources and distract management, and may harm our reputation and financial results.
If we are unable to leverage our sales, marketing, and training infrastructure we may fail to increase our sales.
A key element of our long-term business strategy is the continued leveraging of our sales, marketing, training, and
reimbursement infrastructure,
through the training, retention, and motivation of skilled sales and marketing representatives and
reimbursement personnel with industry experience and knowledge. Our ability to derive revenue from sales of our products
depends largely on our
ability to market the products and obtain reimbursements for them. In order to continue growing our
business efficiently, we must therefore coordinate the development of our sales, marketing, training and reimbursement
infrastructure with the
timing of regulatory approvals, decisions regarding reimbursements, limited resources consideration and
other factors in various geographies. Managing and maintaining our sales and marketing infrastructure is expensive and time
consuming, and an
inability to leverage such an organization effectively, or in coordination with regulatory or other
developments, could inhibit potential sales and the penetration and adoption of our products into both existing and new markets.
However, certain
decisions we make regarding staffing in these areas in our efforts to maintain an adequate spending level could
have unintended negative effects on our revenue, such as by weakening our sales infrastructure, impairing our reimbursement
efforts
and/or harming the quality of our customer service.
Additionally, we expect to face significant challenges as we manage and continue to improve our sales and marketing
infrastructure and work to retain the individuals who make up those networks. Newly hired sales representatives require training
and take time to achieve full productivity. If we fail to train new hires adequately, or if we experience high
turnover in our sales
force in the future, we cannot be certain that new hires will become as productive as may be necessary to maintain or increase our
sales. In addition, if we are not able to retain existing and recruit new trainers to our
clinical staff, we may not be able to
successfully train customers on the use of ReWalk, AlterG, or ReStore systems which could inhibit new sales and harm our
reputation. If we are unable to expand our sales, marketing, and training capabilities,
we may not be able to effectively
commercialize our products, or enhance the strength of our brand, which could have a material adverse effect on our operating
results.
The potential health benefits of our ReWalk products have not been substantiated by long-term clinical data, which could
limit
sales of such products.
Although published research and users of our ReWalk products have reported the potential secondary health benefits of
our ReWalk products such as
a reduction in pain and spasticity, improved bowel and urinary tract functions and emotional and
psychosocial benefits, among others, currently there is no large scale, randomized clinical trial establishing the secondary health
benefits of ReWalk
products due to the relatively small size of the applicable user population. There is also a lack of randomized
clinical data for such health benefits of the ReStore-specifically its long-term benefits following the usage of the product within
the
clinic as the trials conducted to date using this product are limited.
As a result, potential customers and healthcare providers may be slower to adopt or recommend ReWalk products or
ReStore and third-party payors
may not be willing to provide coverage or reimbursement for our products. In addition, future
studies or clinical experience may indicate that treatment with our current or future products is not superior to treatment with
alternative products or
therapies. Such results could slow the adoption of our products and significantly reduce our sales.
35
We depend on third-party suppliers to manufacture our ReWalk and AlterG products and we rely on a limited number of
third-party suppliers for certain components of our products.
We have contracted with Sanmina and Cirtronics, each a well-established contract manufacturer with expertise in the
medical device industry, for
the manufacture of all our ReWalk and ReStore systems and our AlterG products, respectively, and
the sourcing of all of our components and raw materials for those products. We may terminate our relationship with Cirtronics
through notice at least
one year prior to the expiration of the initial term or renewal term of the contract. We may terminate our
relationship with Sanmina at any time upon written notice. Either we, on the one hand, or Sanmina or Cirtronics, on the other
hand, may
terminate the respective relationship in the event of a material breach, subject to a 30-day cure period in the case of
Sanmina or a 45-day period in the case of Cirtronics. For our business strategy to be successful, each of Sanmina and AlterG
must be able to manufacture our products in sufficient quantities, in compliance with regulatory requirements and quality control
standards, in accordance with agreed upon specifications, at acceptable costs and quality levels, and on a timely
basis. Increases
in our product sales, whether forecasted or unanticipated, could strain the ability of Sanmina or Cirtronics to manufacture an
increasingly large supply of our current or future products in a manner that meets these various
requirements. In addition,
although we are not restricted from engaging an alternative manufacturer, and potentially have the capabilities to manufacture our
products in-house, the process of moving our manufacturing activities would be time
consuming and costly, and may limit our
ability to meet our sales commitments, which could harm our reputation and could have a material adverse effect on our business.
Moreover, the failure of either of Sanmina or Cirtronics to comply with
applicable regulatory requirements could expose us to
regulatory action including warning letters, product recalls, termination of distribution, product seizures or civil penalties.
We also rely on third-party suppliers, many of which contract directly with Sanmina and Cirtronics, to supply certain
components of our products,
and in some cases, we purchase these components ourselves. Neither Lifeward, Sanmina, nor
Cirtronics has long-term supply agreements with most of the suppliers and, in many cases, make purchases on a purchase order
basis and our ability to secure
adequate quantities of such products may be limited. Suppliers may encounter problems that limit
their ability to manufacture components for our products, including financial difficulties or damage to their manufacturing
equipment or facilities. If
Lifeward, Sanmina, or Cirtronics fails to obtain sufficient quantities of high-quality components to
meet demand on a timely basis, we could lose customer orders, our reputation may be harmed, and our business could suffer.
Our results of operations and liquidity could be adversely impacted by supply chain disruptions and operational
challenges faced by our
manufacturer or suppliers. Each of Sanmina and Cirtronics generally uses a small number of suppliers for
the ReWalk products and the AlterG products, respectively. Depending on a limited number of suppliers exposes us to risks,
including limited
control over pricing, availability, quality, and delivery schedules. Such risks were heightened in light of the
interruptions in supply chains and distribution networks related to the COVID-19 pandemic. For example, as a result of the
COVID-19
pandemic, several components, mainly electronic parts, experienced price increases. If any one or more of our
suppliers ceases to provide sufficient quantities of components in a timely manner or on acceptable terms, we, Sanmina, or
Cirtronics
would have to seek alternative sources of supply or accept price increase as we saw during the pandemic. It may be
difficult to engage additional or replacement suppliers in a timely manner. Failure of these suppliers to deliver products at the
level our business requires would limit our ability to meet our sales commitments, which could harm our reputation and could
have a material adverse effect on our business. The ability of these suppliers to perform is largely outside of our
control. We,
Sanmina, or Cirtronics also may have difficulty obtaining similar components from other acceptable suppliers, which could
require Sanmina, Cirtronics, or us to cease using the components, seek alternative components or technologies and
we could be
forced to modify our products to incorporate alternative components or technologies, which could result in a requirement to seek
additional regulatory clearances or approvals. Any disruption of this nature or increased expenses could
harm our
commercialization efforts and adversely affect our operating results.
Sanmina’s manufacturing and assembly of our ReWalk products pursuant to our specifications is conducted at a single
facility in Ma’alot,
Israel, and, starting in January 2025, Cirtronics’ manufacturing and assembly of our AlterG products pursuant
to our specifications is conducted at a single facility in Milford, New Hampshire. Accordingly, we are highly dependent on the
uninterrupted and efficient operation of these facilities. If operations at either of these facilities were to be disrupted as a result of
acts of war or terrorism, equipment failures, earthquakes and other natural disasters, fires, accidents, work
stoppages, power
outages, or other reasons such as a local shutdown as we experienced during the COVID-19 pandemic, our business, financial
condition and results of operations could be materially adversely affected. In particular, Sanmina’s
facility is located in the north
of Israel within range of rockets that have from time to time been fired into the country during armed conflicts with Hezbollah
and other armed groups in Lebanon, Syria or other countries in the region. For more
information, see the risk factor below
entitled “Risks Related to Our Incorporation and Location in Israel - Conditions in Israel, including Israel’s wars against Hamas
and other terrorist organizations in
the Gaza Strip and against Hezbollah on Israel’s northern border, may materially and
adversely affect our business and results of operations.” Although our manufacturing and assembly operations could be
transferred elsewhere, either in-house or to
alternative Sanmina or Cirtronics facilities, the process of relocating these operations
would cause delays in production. Lost sales or increased costs that we may experience during the disruption, or a forced
relocation, of operations may not be
recoverable under our insurance policies, and longer-term business disruptions could result
in a loss of customers. If this were to occur, our business, financial condition and operations could be materially negatively
impacted. Additionally, our
reliance on Sanmina and Cirtronics as contract manufacturers or any other contract manufacturer
makes us vulnerable to possible capacity constraints and reduced control over component availability, delivery schedules,
manufacturing yields and
costs.
36
We operate in a competitive industry that is subject to rapid technological change, and we expect competition to increase.
There are several other companies developing technology and devices that compete with our products. Our principal
competitors in the medical
exoskeleton market consist of Ekso Bionics, Rex Bionics, Cyberdyne, FREE Bionics, Wandercraft,
and others. These companies have products currently available for institutional use and in some cases personal use. We expect
some of such products to
become available for personal use in the next few years, especially as we continue to expand coverage
by different payors and geographies. In addition, we compete with alternative devices and alternative therapies, including
treadmill-based gait
therapies, such as those offered by DIH (formerly known as Hocoma), Boost, Aretech, BTL, Reha
Technology, and Bioness, which is a unit of Bioventus. Our competitor base may change or expand as we continue to develop
and commercialize our soft suit
exoskeleton product in the future. These or other medical device or robotics companies, academic
and research institutions, or others, may develop new technologies or therapies that provide a superior walking and usage
experience, are more
effective in treating the secondary medical conditions that we target or are less expensive than ReWalk,
AlterG, or ReStore, or future products. Our technologies and products could be rendered obsolete by such developments. We may
also compete with
other treatments and technologies that address the secondary medical conditions that our products seek to
mitigate.
Our competitors may respond more quickly to new or emerging technologies, undertake more extensive marketing
campaigns, have greater financial,
marketing, and other resources than we do or may be more successful in attracting potential
customers, employees, and strategic partners. In addition, potential customers, such as hospitals and rehabilitation centers, could
have long-standing or
contractual relationships with competitors or other medical device companies. Potential customers may be
reluctant to adopt ReWalk, AlterG, or ReStore, particularly if it competes with or has the potential to compete with or diminish
the
need/utilization of products or treatments supported through these existing relationships. If we are not able to compete
effectively, our business and results of operations will be negatively impacted.
In addition, because we operate in a new market, the actions of our competitors could adversely affect our business.
Adverse events such as
product defects or legal claims with respect to competing or similar products could cause reputational
harm to the exoskeleton market on the whole. Further, adverse regulatory findings or reimbursement-related decisions with
respect to other
exoskeleton products could negatively impact the entire market and, accordingly, our business.
We utilize independent distributors for the ReWalk and ReStore products who are free to market other products that compete
with ours.
While we expect that the percentage of our sales generated from independent distributors will decrease over time as we
continue to focus our
resources on achieving reimbursement within our direct markets in the United States and Europe, we
believe that independent distributors of the ReWalk or ReStore products will continue to be an important distribution channel for
us in the future.
None of our independent distributors has been required to sell our products exclusively. Our agreements with
these distributors generally have one-year initial terms and automatic renewals for an additional year. If any of our key
independent
distributors of the ReWalk or ReStore products were to cease to distribute our products, our sales could be adversely
affected. In such a situation, we may need to seek alternative independent distributors or increase our reliance on our other
independent distributors or our direct sales representatives, which may not prevent our sales from being adversely affected.
Additionally, to the extent that we enter into additional arrangements with independent distributors to perform sales,
marketing,
or distribution services, the terms of the arrangements could cause our product margins to be lower than if we directly marketed
and sold our products.
37
We may receive a significant number of warranty claims or our ReWalk, AlterG, or ReStore systems may require significant
amounts of service after sale.
Sales of ReWalk systems generally include a five-year warranty for parts and services, other than for normal wear and
tear. Some of our active
devices were delivered prior to 2019 with a two-year warranty so we provide these customers with the
option to purchase an extended warranty for up to an additional three years. Our ReStore product offering includes a two-year
warranty for parts
and services. The AlterG Anti-Gravity systems are sold with a one-year factory warranty covering parts and
services. If product returns or warranty claims are significant or exceed our expectations, we could incur unanticipated
expenditures for
parts and services, which could have a material adverse effect on our operating results.
We may not be able to enhance our exoskeleton product offerings through our research and development efforts.
In order to increase our sales and our market share in the exoskeleton market, we are working to enhance and
broaden our
research and development efforts and product offerings in response to the evolving demands of people with paraplegia, paralysis,
other medical conditions and healthcare providers, as well as competitive technologies. We are also
currently involved in ongoing
research and development efforts directed to the needs of patients with other mobility impairments, such as stroke, and began
commercializing our ReStore product for stroke patients in 2019. We continue to market the
device in the U.S. (EU sales ceased
in May 2024). Depending on our future resources and business focus, we plan to address these needs in patients with other
conditions or devices for stroke patients to be used at home, improving our current
products, or developing products to address
additional medical conditions such as multiple sclerosis, Parkinson’s disease or cerebral palsy and support elderly assistance. We
may decide to invest our business development resources in
partnerships, licensing agreements, business acquisition and other
ways that will provide us new product offerings without significant research and development activities. We may not be
successful in developing, obtaining regulatory approval for,
or marketing our currently proposed products, or our approved
products for additional indications, products proposed to be created in the future or products that will be available for us through
business acquisitions. In addition, notwithstanding
our market research efforts, our future products may not be accepted by
consumers, their caregivers, healthcare providers or third-party payors who reimburse consumers for our products. The success of
any proposed product offerings will depend on
numerous factors, including our ability to:
•
identify the product features that people with paraplegia or paralysis, their caregivers, and healthcare providers are seeking in a medical device
that restores upright mobility and successfully incorporate those features into our
products;
•
identify the product features that people with stroke, multiple sclerosis or other similar indications require while the products are used at home as
well as what items are valuable to the clinics that provide them rehabilitation;
•
develop and introduce proposed products in sufficient quantities and in a timely manner;
•
adequately protect our intellectual property and avoid infringing upon the intellectual property rights of third-parties;
•
demonstrate the safety, efficacy, and health benefits of proposed products; and
•
obtain the necessary regulatory clearances and approvals for proposed products.
If we fail to generate demand by developing products that incorporate features desired by consumers, their caregivers or
healthcare providers, or
if we do not obtain regulatory clearance or approval for proposed products in time to meet market
demand, we may fail to generate sales sufficient to achieve or maintain profitability. We have in the past experienced, and we
may in the future
experience, delays in various phases of product development, including during research and development,
manufacturing, limited release testing, marketing, and customer education efforts. Such delays could cause customers to delay or
forgo purchases
of our products, or to purchase our competitors’ products. Even if we are able to successfully develop proposed
products when anticipated, these products may not produce sales in excess of the costs of development, and they may be quickly
rendered
obsolete by changing consumer preferences or the introduction by our competitors of products embodying new
technologies or features.
38
We may enter into collaborations, in-licensing arrangements, joint ventures, strategic alliances, business acquisitions or
partnerships with third parties that may not result in the development of commercially viable products or the generation of
significant future revenue.
In the ordinary course of our business, we may enter into collaborations, in-licensing arrangements, joint ventures,
strategic alliances, business
acquisitions, partnerships or other arrangements to develop our products and to pursue new
geographic or product markets. Proposing, negotiating, and implementing collaborations, in-licensing arrangements, joint
ventures, strategic alliances, or
partnerships may be a lengthy and complex process. Other companies, including those with
substantially greater financial, marketing, sales, technology or other business resources, may compete with us for these
opportunities or arrangements. We may
not identify, secure, or complete any such transactions or arrangements in a timely
manner, on a cost-effective basis, on acceptable terms or at all. We have limited institutional knowledge and experience with
respect to these business development
activities, and we may also not realize the anticipated benefits of any such transaction or
arrangement. In particular, these collaborations may not result in the development of products that achieve commercial success or
result in significant
revenue and could be terminated prior to developing any products. For example, we have entered into
agreements with MediTouch and MYOLYN for the distribution of their products in the U.S. After several years of commercial
collaboration, we
determined that the agreement with MediTouch would not yield commercially acceptable results for us and we
terminated the agreement as of January 31, 2023. Similarly, the distribution arrangement with MYOLYN or other new future
arrangements may not
be as productive or successful as we hope.
On May 16, 2016, we entered into the Collaboration Agreement and License Agreement with Harvard. Pursuant to the
Collaboration Agreement, we have agreed to collaborate with Harvard for the research, design, development, and
commercialization of lightweight exoskeleton system technologies for lower limb disabilities, aimed to treat stroke, multiple
sclerosis, mobility limitations for the elderly and other medical applications. The Collaboration Agreement concluded on March
31, 2022. The License Agreement will continue in full force and effect until the expiration of the last-to-expire valid
claim of the
licensed patents. For more information on the collaboration with Harvard, see “Part I. Item 1. Business - Research and
Development - Research and Development Collaboration.”
Additionally, as we pursue these arrangements and choose to pursue other collaborations, in-licensing arrangements, joint
ventures, strategic
alliances, or partnerships in the future, we may not be in a position to exercise sole decision-making authority
regarding the transaction or arrangement. This could create the potential risk of creating impasses on decisions, and our
collaborators
may have economic or business interests or goals that are, or that may become, inconsistent with our business
interests or goals. It is possible that conflicts may arise with our collaborators. Our collaborators or any future collaborators may
act
in their self-interest, which may be adverse to our best interest, and they may breach their obligations to us. Disputes between
us and our collaborators or any future collaborators may result in litigation or arbitration which would increase our
expenses and
divert the attention of our management. Further, these transactions and arrangements are contractual in nature and may be
terminated or dissolved under the terms of the applicable agreements. Our collaborators or any future
collaborators may allege
that we have breached our agreement with them, and accordingly seek to terminate such agreement, which could adversely affect
our competitive business position and harm our business prospects.
We may seek to grow our business through acquisitions of businesses, products or technologies, and the failure to manage
acquisitions, or the failure to integrate them with our existing business, could have a material adverse effect on our business,
financial condition, and operating results.
From time to time, we may consider opportunities to acquire or license other products or technologies that may enhance
our product platform or
technology, expand the breadth of our markets or customer base, or advance our business strategies. For
example, as discussed above in “Part I. Item 1. Business - Overview”, on August 11, 2023, we completed the acquisition of
AlterG which became an
indirect and wholly-owned subsidiary of the Company. Potential acquisitions involve numerous risks,
including:
●
problems assimilating the acquired products or technologies;
39
●
issues maintaining uniform standards, procedures, controls and policies;
●
problems integrating employees from an acquired organization into our company and integrating each company’s accounting,
management information, human resources and other administrative systems;
●
unanticipated costs associated with acquisitions;
●
diversion of management’s attention from our existing business operations;
●
potential incurrence of debt, contingent liabilities or amortization expenses, or write-offs of goodwill;
●
risks associated with entering new markets in which we have limited or no experience; and
●
increased legal and accounting costs relating to the acquisitions or compliance with regulatory matters.
We have no current commitments with respect to any acquisition or licensing. We do not know if we will be able to
identify such acquisitions or
licensing we deem suitable, whether we will be able to successfully complete any such transactions
on favorable terms, or at all, or whether we will be able to successfully integrate any acquired products or technologies. Our
potential inability to
integrate any acquired products or technologies effectively may adversely affect our business, operating
results, and financial condition. For more information, see the risk factor above entitled “Risks Related to Our Business and Our
Industry – We
may fail to realize the benefits expected from our acquisition of AlterG, which could adversely affect the price of
our ordinary shares.”
Risks Related to Government Regulation
Although the FDA granted Breakthrough Device Designation status to our ReBoot device, this designation does not
guarantee
regulatory clearance, or a speedier clearance timeline.
In November 2021, the FDA granted Breakthrough Device Designation status to ReBoot, a personal soft exo-suit for
home and community use by
individuals post-stroke. For more information regarding the Breakthrough Device, see “Part I, Item
1. Business-Government Regulation” above.
However, achieving Breakthrough Device Designation status does not guarantee regulatory clearance or approval or a
speedier clearance or approval
timeline. We have not yet submitted a premarket submission to the FDA or any foreign regulatory
agency for clearance or other marketing authorization of ReBoot. Further investment in the development path of the ReBoot was
paused in 2023 pending
determination regarding the clinical and commercial opportunity of this device and it remains
indefinitely on hold.
U.S. healthcare reform measures and other potential legislative initiatives could adversely affect our business.
Recent political changes in the United States could result in significant changes in, and uncertainty with respect to,
legislation, regulation,
global trade, and government policy that could substantially impact our business and the medical device
industry generally. Certain proposals, if enacted into law, could impose limitations on the prices we will be able to charge for our
ReWalk
system or any products we may develop and offer in the future, or the amounts of reimbursement available for such
products from governmental agencies or third-party payors. Additionally, any reduction in reimbursement from Medicare or other
government-funded federal programs, including the VHA, or state healthcare programs could lead to a similar reduction in
payments from private commercial payors. The FDA’s policies may also change, and additional government regulations may be
issued that could prevent, limit, or delay regulatory approval of our future products, or impose more stringent product labeling
and post-marketing testing and other requirements.
We expect that changes or additions to the Medicare and Medicaid programs, changes allowing the federal government to
directly negotiate drug
prices and changes stemming from other healthcare reform measures, especially with regard to healthcare
access, financing or other legislation in individual states, could have a material adverse effect on the healthcare industry.
40
The Budget Control Act of 2011, among other things, created the Joint Select Committee on Deficit Reduction to
recommend proposals in spending
reductions to Congress. The Joint Select Committee did not achieve its targeted deficit
reduction of an amount greater than $1.2 trillion for the fiscal years 2012 through 2021, triggering the legislation’s automatic
reductions to several
government programs. These reductions included aggregate reductions to Medicare payments to healthcare
providers of up to 2% per fiscal year. The Bipartisan Budget Act of 2018 retained the federal budget “sequestration” Medicare
payment reductions
of 2% and extended it through 2031. Under the Consolidated Appropriations Acts of 2023 and 2024, the
Medicare sequester percentage in FY2032 is scheduled to be 2% from April 1, 2032, through September 30, 2032, and 0% for
October 1, 2032, through
March 31, 2032, unless congressional action is taken. On January 2, 2013, the American Taxpayer
Relief Act was signed into law, which, among other things, reduced Medicare payments to several types of providers, including
hospitals, imaging
centers, and cancer treatment centers, and increased the statute of limitations period for the government to
recover overpayments to providers from three to five years. The 2022 Inflation Reduction Act, among other things, directs CMS
to engage in
price-capped negotiation for certain drugs and biologics that CMS reimburses under Medicare Part B and Part D,
penalizes drug manufacturers that increase prices of Medicare Part B and Part D drugs at a rate greater than the rate of inflation,
and
redesigns the Part D drug benefit, effective in 2025.
The implementation of cost containment measures or other healthcare reforms may thus prevent us from being able to
generate revenue, attain
profitability or further commercialize our existing or future products. We are currently unable to predict
what additional legislation or regulation, if any, relating to the health care industry may be enacted in the future or what effect
recently
enacted federal legislation or any such additional legislation or regulation would have on our business. The pendency or
approval of such proposals or reforms could result in a decrease in our stock price or limit our ability to raise capital or to
enter
into collaboration agreements for the further development and commercialization of our programs and products.
Our devices are subject to the FDA’s regulations pertaining to marketing and promotional communications, among others.
Failure
to comply with such regulations may give rise to a number of potential FDA enforcement actions, any of which could
have a material adverse effect on our business.
Our sales and marketing efforts, as well as promotions, are subject to various laws and regulations. Medical device
promotions must be consistent
with and not contrary to labeling and the indication for use, be truthful and not false or misleading,
and be adequately substantiated. In addition to the requirements applicable to 510(k)-cleared products, we may also be subject to
enforcement
action in connection with any promotion of an investigational new device. A sponsor or investigator, or any person
acting on behalf of a sponsor or investigator, may not represent in a promotional context that an investigational new device is safe
or effective for the purposes for which it is under investigation or otherwise promote the device.
Our marketing and promotional materials are subject to FDA scrutiny to ensure that the device is being marketed in
compliance with these
requirements. If the FDA investigates our marketing and promotional materials and finds that any of our
current or future commercial products were being marketed for unapproved or uncleared uses or in a false or misleading manner,
we could be
subject to FDA enforcement or enforcement from other government agencies, and/or false advertising consumer
lawsuits, each of which could have a material adverse effect on our business.
We are subject to extensive governmental regulations relating to the manufacturing, labeling, and marketing of our products,
and a failure to comply with such regulations could lead to withdrawal or recall of our products from the market.
Our medical products and manufacturing operations are subject to regulation by the FDA, the European Union, and other
governmental authorities
both inside and outside of the United States. These agencies enforce laws and regulations that govern
the development, testing, manufacturing, labeling, storage, installation, servicing, advertising, promoting, marketing, distribution,
import,
export and market surveillance of our products.
Our products are regulated as medical devices in the United States under the FFDCA as implemented and enforced by the
FDA. Under the FFDCA,
medical devices are classified into one of three classes (Class I, Class II or Class III) depending on the
degree of risk associated with the medical device, what is known about the type of device, and the extent of control needed to
provide
reasonable assurance of safety and effectiveness. Classification of a device is important because the class to which a
device is assigned determines, among other things, the necessity and type of FDA review required prior to marketing the device.
For more information, see “Part I, Item 1. Business-Government Regulation” above.
In June 2014, the FDA granted our request for “de novo” classification, which provides a route to market for medical
devices that are low to
moderate risk, but are not substantially equivalent to a predicate device, and classified ReWalk as Class II
powered exoskeleton device subject to certain special controls. In March 2023 the FDA granted 510(k) clearance for the ReWalk
Personal
Exoskeleton with stair and curb functionality, which adds usage on stairs and curbs to the indication for use for the
device in the U.S. The ReWalk is intended to enable individuals with spinal cord injuries to perform ambulatory functions under
supervision of a specially trained companion, and inside rehabilitation institutions. The special controls established in the de novo
order for all powered exoskeletons include the following: clinical testing to demonstrate safe and effective use
considering the
level of supervision necessary and the use environment; non-clinical safety and performance testing, including durability testing
to demonstrate that the device performs as intended under anticipated conditions of use; a training
program; and labeling related
to device use and user training. In order for us to market ReWalk, we must comply with both general controls, including controls
related to quality, facility registration, reporting of adverse events and labeling,
and the special controls established for the device.
Failure to comply with these requirements could lead to an FDA enforcement action, which would have a material adverse effect
on our business.
In June 2019, the FDA issued a 510(k) clearance for our ReStore device. ReStore is intended to be used to assist
ambulatory functions in
rehabilitation institutions under the supervision of a trained therapist for people with hemiplegia or
hemiparesis due to stroke who have a specified amount of ambulatory function. In order for us to market ReStore and ReWalk,
we must comply with
both general controls, including controls related to quality, facility registration, reporting of adverse events
and labeling, and the special controls established for powered exoskeleton devices as described above. Failure to comply with
these
requirements could lead to an FDA enforcement action, which would have a material adverse effect on our business.
41
In the E.U. we are subject to regulations and standards regulating the design, manufacture, clinical trials,
labeling and
adverse event (i.e., vigilance) reporting for medical devices. The Medical Devices Regulation (EU) 2017/745 (MDR) became
fully applicable on May 26, 2021, repealing and replacing the pre-existing E.U. Medical Devices Directive
93/42/EEC. Devices
that comply with the requirements of the MDR, subject to certain transitional provisions that allow continued compliance of
certain products to the Directive, are entitled to bear the CE mark, indicating that the device
conforms to the essential
requirements of the MDR and, accordingly, can be commercially distributed throughout the European Economic Area (i.e., the
E.U. Member States plus Norway, Iceland, and Lichtenstein). We comply with the E.U. requirements
and have received the CE
mark for all of our ReWalk systems including the ReStore device which are distributed in the E.U. As compared with the
Directive, the MDR includes additional premarket and post-market requirements, as well as potential
product reclassifications
and more stringent commercialization requirements that could adversely affect our CE mark. Failure to comply with these new
requirements could lead to substantial penalties, including fines, revocation or suspension of
CE mark and criminal sanctions.
Because the ReStore was not planned for MDR conformity, we ceased sales of the ReStore in the EU in May 2024.
Following the introduction of a product, the governmental agencies will periodically inspect our manufacturing processes
and quality controls, and
we are under a continuing obligation to ensure that all applicable regulatory requirements continue to be
met. The process of complying with the applicable good manufacturing practices, adverse event reporting and other requirements
can be costly
and time consuming, and could delay or prevent the production, manufacturing, or sale of our devices. In addition,
if we fail to comply with applicable regulatory requirements, it could result in fines, closure of manufacturing sites, seizures or
recalls of products and damage to our reputation, as well as enforcement actions against us. For example, the FDA could request
that we recall our ReWalk Personal Exoskeleton or ReStore device in case of product defects or require us to conduct
post-market
surveillance studies. If we fail to recall the device and/or conduct requested post-market surveillance studies to FDA’s
satisfaction, we could be subject to FDA enforcement action.
In addition, governmental agencies may impose new requirements regarding registration or labeling that may require us to
modify or re-register our
products or otherwise impact our ability to market our products in those countries, such as the May
2021 Medical Device Regulation changes in the European Union. The process of complying with these governmental regulations
can be costly and time
consuming, and could delay or prevent the production, manufacturing, or sale of our products.
If we or our third-party manufacturers fail to comply with the FDA’s Quality System Regulation, or QSR, our
manufacturing
operations could be interrupted.
We and our manufacturers, Sanmina and Cirtronics, are required to comply with the FDA’s QSR which covers the
methods and documentation of the design, testing, production, control, quality assurance, labeling, packaging, sterilization,
storage, and shipping of our products. In February 2024, the FDA issued the Quality Management System Regulation Final
Rule
to amend the QSR, incorporating by reference the international standard for medical device quality management systems set by
the International Organization for Standardization (ISO), ISO 13485:2016. The rule will become effective on
February 2, 2026.
Until then, manufacturers are required to comply with the QSR. We, Sanmina, Cirtronics and our suppliers are also subject to the
regulations of foreign jurisdictions regarding the manufacturing process if we or our
distributors market our products abroad. We
actively maintain compliance with the FDA’s QSR, and the European Union’s Quality Management Systems requirements, ISO
13485:2016. We continue to monitor our quality management to maintain our overall
level of compliance. Our facilities are
subject to periodic and unannounced inspection by U.S. and foreign regulatory agencies to audit compliance with the QSR and
comparable foreign regulations. If our facilities or those of Sanmina of
Cirtronics or our suppliers are found to be in violation of
applicable laws and regulations, or if we, Sanmina, Cirtronics or our suppliers fail to take satisfactory corrective action in
response to an adverse inspection, the regulatory
authority could take enforcement action, including any of the following
sanctions:
●
untitled letters, warning letters, fines, injunctions, consent decrees and civil penalties;
●
customer notifications or repair, replacement, or refunds;
●
operating restrictions or partial suspension or total shutdown of production;
●
recalls, withdrawals, or administrative detention or seizure of our products;
●
denials or delays of approvals for pre-market approval applications relating to new products or modified products;
●
withdrawals of a PMA approvals;
●
refusal to provide Certificates for Foreign Government;
●
refusal to grant export approval for our products; or
●
pursuit of criminal prosecution.
Any of these sanctions could impair our ability to produce our products in a cost-effective and timely manner in order to
meet our customers’
demands and could have a material adverse effect on our reputation, business, results of operations, and
financial condition. We may also be required to bear other costs or take other actions that may have a negative impact on our
future sales
and our ability to generate profits.
42
We are subject to various laws and regulations, including “fraud and abuse” laws and anti-bribery laws, which, if violated,
could subject us to substantial penalties.
Medical device companies such as ours have faced lawsuits and investigations pertaining to alleged violations of
numerous statutes and
regulations, including anti-corruption laws and health care “fraud and abuse” laws, such as the federal
False Claims Act, the federal Anti-Kickback Statute, and the U.S. Foreign Corrupt Practices Act, or the FCPA.
U.S. federal and state laws, including the federal Sunshine Act, and the implementation of Open Payments regulations
under the Sunshine Act,
require medical device companies to disclose certain payments or other transfers of value made to
certain healthcare providers or funds spent on marketing and promotion of medical device products. Further, some state laws
require medical device
companies to report information related to payments to physicians and other health care providers or
marketing expenditures. They also impose additional administrative and compliance burdens on us. In particular, these laws
influence, among other
things, how we structure our sales offerings and other interactions with health care providers, including
discount practices, customer support, education and training programs and physician consulting and other service arrangements,
including those
with marketers and sales agents. We may face significant costs in attempting to comply with these laws and
regulations. If we are found to be in violation of any of these requirements or any actions or investigations are instituted against
us,
those actions could be costly to defend and could have a significant impact on our business, including the imposition of
significant criminal and civil fines and penalties, exclusion from federal healthcare programs or other sanctions, and damage
to
our reputation or business.
The FCPA applies to U.S. companies, including companies like ours that are issuers of a class of securities registered
under the Exchange Act. The
FCPA and other global and local anti-bribery laws which apply to various aspects of our operations
generally prohibit companies and their directors, officers, employees, agents, and other intermediaries from, directly or indirectly,
authorizing,
promising, offering, providing, or making improper payments or giving anything else of value to government
officials for the purpose of obtaining or retaining an unfair business advantage. The FCPA also requires issuers to make and keep
books and
records that accurately and fairly reflect the transactions of the corporation and to devise and maintain an adequate
system of internal accounting controls. In various jurisdictions, our operations require us and third parties acting on our behalf
to
routinely interact with government officials, including medical personnel who may be considered government officials for
purposes of these laws because they are employees of state-owned or controlled facilities. Other applicable anti-bribery
laws,
including the U. K. Bribery Act, also prohibit improper payments to private parties and prohibit the receipt of improper
payments. Our policies mandate compliance with applicable anti-bribery laws and prohibit our employees and third parties
we
engage from offering, making or receiving corrupt payments. We have also implemented a robust anti-corruption program to
mitigate the risk of violations of anti-bribery laws relating to our international operations. However, our program cannot
eliminate all risk that unauthorized improper acts have been or will be committed by our employees or agents. Violations of anti-
bribery laws, or allegations of such violations, could result in civil or criminal sanctions or other adverse
consequences, including
disruption of our business and harming our financial condition, results of operations, cash flows and reputation.
If we are found to have violated laws protecting the confidentiality of patient health
information, we could be subject to
civil or criminal penalties, which could increase our liabilities and harm our reputation or our business.
There are a number of federal, state and foreign laws protecting the confidentiality of certain patient health
information,
including patient records, and restricting the use and disclosure of that protected information. In particular, the U.S. Department
of Health and Human Services, or HHS, promulgated patient privacy rules under HIPAA. These privacy
rules protect medical
records and other personal health information by limiting their use and disclosure, giving individuals the right to access, amend
and seek accounting of their own health information and limiting most use and disclosures of
health information to the minimum
amount reasonably necessary to accomplish the intended purpose. Additionally, the E.U. General Data Protection Regulation (the
“EU GDPR”) and the E.U. Member State laws, imposes more stringent data protection
requirements and provides for penalties
for noncompliance. Additionally, if we or any of our service providers are found to be in violation of the promulgated patient
privacy rules under HIPAA or the EU GDPR and E.U. Member State laws, we could
be subject to civil or criminal penalties,
which could be substantial and could increase our liabilities, harm our reputation and have a material adverse effect on our
business, financial condition and operating results.
A number of U.S. states have also
enacted data privacy and security laws and regulations that govern the collection, use,
disclosure, transfer, storage, disposal, and protection of sensitive personal information, such as social security numbers, financial
information and other
personal information. For example, several U.S. territories and all 50 states now have data breach laws that
require timely notification to individual victims, and at times regulators, if a company has experienced the unauthorized access or
acquisition of sensitive personal data. Several states have also enacted comprehensive consumer privacy laws that regulate
controllers’ processing of consumers’ personal data, including the California Consumer Privacy Act (“CCPA”), which went
into
effect on January 1, 2020 and, among other things, established a comprehensive privacy framework for covered businesses by
creating an expanded definition
of personal information, establishing new data privacy rights for consumers in the State of
California, imposing special rules on the collection of consumer data from minors, and creating a new and potentially severe
statutory damages framework
for violations of the CCPA and for businesses that fail to implement reasonable security procedures
and practices to prevent data breaches. The CCPA was amended by the California Privacy Rights Act which, as of January 1,
2023, has
significantly modified the CCPA, including by expanding consumers’ rights with respect to certain categories of
sensitive personal information.
Similar laws have been passed in numerous other states. Other states have proposed new privacy laws which, if
enacted,
may add additional complexity, variation in requirements, restrictions and potential legal risk, require additional investment of
resources in compliance programs, impact strategies and the availability of previously useful data and
could result in increased
compliance costs and/or changes in business practices and policies. The existence of comprehensive privacy laws in different
states in the country would make our compliance obligations more complex and costly and may
increase the likelihood that we
may be subject to enforcement actions or otherwise incur liability for noncompliance. There are also states that are specifically
regulating health information. For example, Washington’s My Health My Data Act,
which became effective on March 31, 2024,
regulates the collection and sharing of health information and has a private right of action, which further increases the relevant
compliance risk. Connecticut and Nevada have also passed similar laws
regulating consumer health data. In addition, other states
have proposed and/or passed legislation that regulates the privacy and/or security of certain specific types of information. For
example, a small number of states have passed laws that
regulate biometric data specifically.
We will continue to monitor and assess the impact of state law developments, which may impose substantial penalties
for
violations, impose significant costs for investigations and compliance, allow private class-action litigation and carry significant
potential liability for our business. These various privacy and security laws may impact our business
activities, including our
identification of research subjects, relationships with business partners and ultimately the marketing and distribution of our
products. State laws are changing rapidly and there are discussions in the U.S. Congress of
new comprehensive federal data
privacy laws to which we could become subject to, if enacted.
43
Our operations may also be subject to European data privacy laws, regulations and guidelines. The collection, use,
storage, disclosure, transfer, or other processing of personal information regarding individuals in the EEA and UK, including
personal health data, is subject to the EU GDPR, with respect to the EEA and the UK General Data Protection Regulation
and
UK Data Protection Act 2018 with respect to the UK, or UK GDPR, and collectively with the EU GDPR referred to as the
“GDPR” in this document unless specified otherwise. The GDPR is wide-ranging in scope and imposes numerous requirements
on
companies that process personal information, including requirements relating to processing of special categories of personal
information (such as health data), relying on a legal basis or condition for processing personal information, where
required
obtaining consent of the individuals to whom the personal information relates, providing information to individuals regarding
data processing activities, conducting privacy impact assessments for “high risk” processing, implementing
safeguards to protect
the security and confidentiality of personal information, implementing limitations on the retention of personal information,
providing mandatory notification of data breaches, and taking certain measures when engaging
third-party processors. The GDPR
also imposes strict rules on the transfer of personal information to countries outside the EEA and UK to non-adequate territories,
including the United States in certain circumstances unless derogation exists or a
valid GDPR transfer mechanism (for example,
the European Commission approved Standard Contractual Clauses, or SCCs, and the UK International Data Transfer
Agreement/Addendum, or UK IDTA) have been put in place. Where relying on the SCCs /UK IDTA
for data transfers, we may
also be required to carry out transfer impact assessments to assess whether the recipient is subject to local laws which allow
public authority access to personal information. Failure to comply with the GDPR, and any
supplemental EEA Member State or
UK national data protection laws which may apply by virtue of the location of the individuals whose personal information we
collect, may result in substantial penalties, including potential fines of up to €20
million (£17.5 million for the UK GDPR) or 4%
of annual global revenues for the preceding financial year, whichever is greater. The GDPR also confers a private right of action
on data subjects and consumer associations to lodge complaints with
supervisory authorities, seek judicial remedies, and obtain
compensation for damages resulting from violations of the GDPR. The GDPR increases our responsibility and liability in relation
to personal information that we process where such
processing is subject to the GDPR, and requires us to put in place additional
mechanisms to ensure compliance with the GDPR, including as implemented by individual countries. Compliance with the
GDPR will be a rigorous and time-intensive process
that may increase our cost of doing business or require us to change our
business practices, and despite those efforts, there is a risk that we may be subject to fines and penalties, litigation, and
reputational harm in connection with our
European activities.
Furthermore, in the EEA, the NIS 2 Directive (“NIS 2”) is replacing the cybersecurity legal framework under the
current
NIS framework, aiming to ensure a high level of cybersecurity in the region. NIS 2 brings new medium and large organisations
providing services in the EEA within scope of the legal framework. It extends to additional sectors and expands
the list of in-
scope healthcare organisations, including to certain providers engaged in research and development of medicinal products. The
new regime imposes direct obligations on management in respect of an in-scope organization's compliance
with NIS 2, requires
covered organisations to put in place certain cyber risk management measures, strengthens incident reporting requirements and
provides supervisory authorities with a greater oversight. The majority of obligations will come
into force when national
legislation implementing NIS 2 becomes effective in the relevant EU Member State. EU Member States had until 17 October
2024 to transpose NIS 2 into national legislation, although many countries have still not completed
the transposition. As such, the
cybersecurity regulatory landscape in the EU is currently fragmented and uncertain. To the extent we are subject to NIS 2, we
will require additional investment of our resources in compliance programs. Under NIS 2
companies may be subject to
administrative fines of up to the higher amount of €10 million or 2% of worldwide turnover.
All of these evolving compliance and operational requirements impose significant costs, such as costs related to
organizational changes, implementing additional protection technologies, training employees and engaging consultants and legal
advisors, which are likely to increase over time. In addition, such requirements may require us to modify our data
processing
practices and policies, utilize management’s time and/or divert resources from other initiatives and projects. The interpretation
and enforcement of the laws and regulations described above are uncertain and subject to change and may
require substantial
costs to monitor and implement compliance with any additional requirements. Failure, or perceived failure, to comply with U.S.
or international data protection laws and regulations could result in government enforcement
actions (which could include
substantial civil and/or criminal penalties), private litigation, including class action privacy litigation in certain jurisdictions,
and/or adverse publicity. which would subject us to significant fines, sanctions,
awards, injunctions, penalties or judgments. All
of the above could negatively affect our financial condition, operating results and business.
Our use of new and evolving technologies, such as artificial intelligence, may present risks and challenges that
can impact
our business, including by posing cybersecurity and other risks to our confidential and/or proprietary information, including
personal information, and as a result we may be exposed to reputational harm and liability.
We may use and integrate artificial intelligence into our business processes. Use of this technology presents risks and
challenges
that could affect our business. If we enable or use solutions that draw controversy due to perceived or actual negative
societal impact, we may experience brand or reputational harm, competitive harm or legal liability.
A growing number of legislators and regulators are adopting laws and regulations and have focused enforcement efforts
on the
adoption of artificial intelligence, and use of such technologies in compliance with ethical standards and societal
expectations. These developments may increase our compliance burden and costs in connection with use of artificial intelligence
and lead to legal liability if we fail to meet evolving legal standards or if use of such technologies results in harms or other causes
of action we did not predict. For example, the EU’s Artificial Intelligence Act (“AI Act”) entered into force
on August 1, 2024,
with most provisions becoming effective on August 2, 2026. This legislation imposes significant obligations on providers and
deployers of artificial intelligence systems, and encourages providers and deployers of artificial
intelligence systems to account
for EU ethical principles in their development and use of these systems. The scope of requirements depends on legal and risk
determinations that rely on novel legal provisions that have not yet been interpreted by
courts or regulators, and non-compliance
can lead to significant fines.
44
Likewise, in the U.S., several states, including Colorado and California, passed laws that will take effect in 2026, to
regulate
various uses of artificial intelligence, including to make consequential decisions. In addition, various federal regulators
have issued guidance and focused enforcement efforts on the use of AI in regulated sectors. The U.S. Food and Drug
Administration, for example, issued guidance on the use of artificial intelligence in medical devices, requiring detailed risk
management and review processes to obtain approvals. If we develop or use AI systems governed by these laws or
regulations,
we will need to meet higher standards of data quality, transparency, monitoring and human oversight, and we would need to
adhere to specific and potentially burdensome and costly ethical, accountability, and administrative
requirements, with the
potential for significant enforcement or litigation in the event of any perceived non-compliance.
The rapid evolution of artificial intelligence will require the application of significant resources to design, develop, test
and
maintain such systems to help ensure that artificial intelligence is implemented in accordance with applicable law and
regulation and in a socially responsible manner and to minimize any real or perceived unintended harmful impacts. The use of
certain artificial intelligence technologies can also give rise to intellectual property risks, including by disclosing or otherwise
compromising our confidential or proprietary intellectual property, or by undermining our ability to assert or
defend ownership
rights in intellectual property created with the assistance of artificial intelligence tools.
Our vendors may in turn incorporate artificial intelligence tools into their offerings, and the providers of these artificial
intelligence tools may not meet existing or rapidly evolving regulatory or industry standards, including with respect to privacy
and data security. Further, bad actors around the world use increasingly sophisticated methods, including the use of
artificial
intelligence, to engage in illegal activities involving the theft and misuse of personal information, confidential information and
intellectual property. Any of these effects could damage our reputation, result in the loss of valuable
property and information,
cause us to breach applicable laws and regulations, and adversely impact our business.
Compliance with various regulations, including those related to our status as a U.S. public company and the manufacturing,
labeling, and marketing of our products, may result in heightened general and administrative expenses and costs, divert
management’s attention from revenue-generating activities and pose challenges for our management team, which has limited
time,
personnel and finances to devote to regulatory compliance.
As a U.S. public company, we are subject to various regulatory and reporting requirements, including those imposed by
the SEC, the Sarbanes-Oxley
Act of 2002, or the Sarbanes-Oxley Act, the Dodd-Frank Wall Street Reform and Consumer
Protection Act of 2010, or the Dodd-Frank Act, the listing requirements of The Nasdaq Capital Market and other applicable
securities rules and regulations.
Additionally, our medical products and manufacturing operations are regulated by the FDA, the
European Union and other governmental authorities both inside and outside of the United States. Compliance with the rules and
regulations applicable to us
as a publicly traded company in the United States and medical device manufacturer has greatly
increased, and may continue to increase, our legal, general and administrative and financial compliance costs and has made, and
may continue to make, some
activities more difficult, time-consuming or costly. Additionally, these regulatory requirements have
diverted, and may continue to divert, management’s attention from revenue-generating activities and may increase demands on
management’s
already-limited resources.
Our management team consists of few employees, as the majority of our employees are engaged in sales and marketing
and research and development
activities. For more information, see “Part I, Item 1. Business—Employees” above. In light of
such constraints on its time, personnel and finances, our management may not be able to implement programs and policies in an
effective and timely manner
to respond adequately to the heightened legal, regulatory and reporting requirements applicable to
us. In the past, for example, we have not always been able to respond on a timely basis to requests from regulators, although we
have not to date
experienced any long-term material adverse consequences as a result. Similar deficiencies, weaknesses, or lack
of compliance with public company, medical device and other regulations could harm our reputation in the capital markets or for
quality
and safety, negatively affect our ability to maintain our public company status and to develop, commercialize or continue
selling our products on a timely and effective basis, and cause us to incur sanctions, including fines, injunctions, and
penalties.
In addition, complying with public disclosure rules makes our business more visible, which we believe may result in
threatened or actual
litigation, including by competitors and other third parties. If such claims are successful, our business and
operating results could be harmed, and even if the claims do not result in litigation or are resolved in our favor, these claims, and
the
time and resources necessary to resolve them, could divert the resources of our management and harm our business and
operating results.
We are also subject to the requirement of Section 1502 of the Dodd-Frank Act and SEC rules related thereto to conduct
due diligence and disclose
and report on whether certain minerals and metals, known as “conflict minerals,” are contained in our
products and whether they originate from the Democratic Republic of Congo and certain adjoining countries. Each year our
management team devotes
significant time to conduct the required due diligence, and we may face reputational challenges if we
determine that certain of our products contain minerals not determined to be conflict free or if we are unable to sufficiently verify
the origins
of all conflict minerals used in our products through the procedures we implement.
45
Risks Related to Our Intellectual Property and Information Technology
We depend on computer and telecommunications systems we do not own or control and failures in our systems or a
cybersecurity
attack or incident relating to our IT systems or technology could significantly disrupt our business operations or
result in sensitive customer information being compromised which would negatively materially affect our reputation and/or
results of
operations.
We have entered into agreements with third parties for hardware, software, telecommunications, and other
information
technology services in connection with the operation of our business. It is possible we or a third party that we rely on could incur
interruptions from a loss of communications, hardware or software failures, a cybersecurity attack,
data breach or an incident
relating to our IT systems or technology, ransomware, phishing attacks, computer viruses or malware. We believe that we have
positive relations with our vendors and maintain adequate anti-virus and malware software and
controls; however, any
interruptions to our arrangements with third parties, to our computing and communications infrastructure, or to our information
systems or any of those operated by a third party that we rely on could significantly disrupt
our business operations.
In the current environment, there are numerous and evolving risks to cybersecurity and privacy, including criminal
hackers, hacktivists, state-sponsored intrusions, industrial espionage, employee malfeasance and human or technological error.
High-profile cybersecurity incidents and data breaches at other companies and in government agencies have increased in
recent
years, and security industry experts and government officials have warned about the risks of hackers and cyberattacks targeting
businesses such as ours. Computer hackers and others routinely attempt to breach the security of technology
products, services,
and systems, and to fraudulently induce employees, customers, or others to disclosure information or unwittingly provide access
to systems or data. A cyberattack of our systems or networks that impairs our information
technology systems could disrupt our
business operations and result in loss of service to customers, including technical support for our ReWalk devices. While we have
certain cybersecurity safeguards in place designed to protect and preserve the
integrity of our information technology systems, we
have experienced and expect to continue to experience actual or attempted cyberattacks of our IT systems or networks. However,
none of these actual or attempted cyberattacks has had a material
effect on our operations, business strategy, or financial
condition. Although we maintain cyber liability insurance, this insurance may not provide adequate coverage against potential
liabilities related to any experienced cybersecurity incident
or data breach.
Additionally, we have access to sensitive customer information in the ordinary course of business. If a significant
cybersecurity incident
occurred, our reputation may be adversely affected, customer confidence may be diminished, or we may
be subject to legal claims, any of which may contribute to the loss of customers and have a material adverse effect on us. For
more information,
see “—Risks Related to Government Regulation” above. If we are found to have violated laws protecting the
confidentiality of patient health information, we could be subject to civil or criminal penalties, which could increase our liabilities
and
harm our reputation or our business.
Our success depends in part on our ability to obtain and maintain protection for the intellectual property relating to or
incorporated into our products.
Our success depends in part on our ability to obtain and maintain protection for the intellectual property relating to or
incorporated into our
products. We seek to protect our intellectual property through a combination of patents, trademarks,
confidentiality, and assignment agreements with our employees and certain of our contractors, and confidentiality agreements
with certain of our
consultants, scientific advisors, and other vendors and contractors. In addition, we rely on trade secret law to
protect our proprietary software and product candidates/products in development. For more information, see “Part I, Item 1.
Business—Intellectual Property” above.
Our patent position with respect to our exoskeleton and anti-gravity systems can be highly uncertain and involves many
new and evolving complex
legal, factual, and technical issues. Patent laws and interpretations of those laws are subject to change
and any such changes may diminish the value of our patents or narrow the scope of our right to exclude others. In addition, we
may fail to
apply for or be unable to obtain patents necessary to protect our technology or products from competition or fail to
enforce our patents due to lack of information about the exact use of technology or processes by third parties. Also, we cannot be
sure that any patents will be granted in a timely manner or at all with respect to any of our patent pending applications or that any
patents that are granted will be adequate to exclude others for any significant period of time or at all. Given
the foregoing and in
order to continue reducing operational expenses in the future, we may invest fewer resources in filing and prosecuting new
patents and on maintaining and enforcing various patents, especially in regions where we currently do
not focus our market
growth strategy.
46
Litigation to establish or challenge the validity of patents, or to defend against or assert against others infringement,
unauthorized use,
enforceability, or invalidity, can be lengthy and expensive and may result in our patents being invalidated or
interpreted narrowly and restricting our ability to be granted new patents related to our pending patent applications. Even if we
prevail, litigation may be time consuming, force us to incur significant costs, and could divert management’s attention from
managing our business while any damages or other remedies awarded to us may not be valuable. In addition, U.S. patents and
patent applications may be subject to interference proceedings, and U.S. patents may be subject to re-examination and review
proceedings in the U.S. Patent and Trademark Office. Foreign patents may also be subject to opposition or comparable
proceedings in the corresponding foreign patent offices. Any of these proceedings may be expensive and could result in the loss
of a patent or denial of a patent application, or the loss or reduction in the scope of one or more of the claims of a
patent or patent
application.
In addition, we seek to protect our trade secrets, know-how, and confidential information that is not patentable by entering
into confidentiality
and assignment agreements with our employees and certain of our contractors and confidentiality agreements
with certain of our consultants, scientific advisors, and other vendors and contractors. However, we may fail to enter into the
necessary
agreements, and even if entered into, these agreements may be breached or otherwise fail to prevent disclosure, third-
party infringement, or misappropriation of our proprietary information, may be limited as to their term and may not provide an
adequate remedy in the event of unauthorized disclosure or use of proprietary information. Enforcing a claim that a third party
illegally obtained or is using our trade secrets without authorization may be expensive and time consuming, and the
outcome is
unpredictable. Some of our employees or consultants may own certain technology which they license to us for a set term. If these
technologies are material to our business after the term of the license, our inability to use them could
adversely affect our
business and profitability.
We also have taken precautions to initiate reasonable safeguards to protect our information technology systems. However,
these measures may not be
adequate to safeguard our proprietary information, which could lead to the loss or impairment thereof
or to expensive litigation to defend our rights against competitors who may be better funded and have superior resources. In
addition,
unauthorized parties may attempt to copy or reverse engineer certain aspects of our products that we consider
proprietary, or our proprietary information may otherwise become known or may be independently developed by our competitors
or other third
parties. If other parties are able to use our proprietary technology or information, our ability to compete in the
market could be harmed. Further, unauthorized use of our intellectual property may have occurred, or may occur in the future,
without
our knowledge.
If we are unable to obtain or maintain adequate protection for intellectual property, or if any protection is reduced or
eliminated, competitors
may be able to use our technologies, resulting in harm to our competitive position.
Our patents and proprietary technology and processes may not provide us with a competitive advantage.
Robotics, exoskeletons, and anti-gravity system technologies have been developing rapidly in recent years. We are aware
of several other companies
developing competing exoskeleton devices for individuals with limited mobility and we expect the
level of competition and the pace of development in our industry to increase. Likewise, we are aware of several companies with
commercial anti-gravity
or treadmill-based gait therapy systems. For more information, see “Part I, Item 1. Business—
Competition” above. While we believe our tilt-sensor technology provides a more natural and superior method of exoskeleton
activation, which creates a
better user experience, as well as that our licensed technology used in our ReStore device is unique
and provides better results when compared to other products, a variety of other activation and control methods exist for
exoskeletons, several of
which are being developed by our competitors, or may be developed in the future. Additionally, while
our DAP technology provides what we believe is a superior method for partial weight displacement with strong market
acceptance, there may be
competitors developing innovative alternative gait therapies that could be introduced in the future. As a
result, our patent portfolio and proprietary technology and processes may not provide us with a significant advantage over our
competitors,
and competitors may be able to design and sell alternative products that are equal to or superior to our products
without infringing on our patents. In addition, as our current patents begin to expire, we may lose a competitive advantage over
our
competitors as we will no longer be able to keep our competitors from practicing the technology covered by the claim of the
expired patents. We may also be unable to adequately develop new technologies and obtain future patent protection to
preserve a
competitive advantage. If we are unable to maintain a competitive advantage, our business and results of operations may be
materially adversely affected.
47
Even in instances where others are found to infringe on our patents, many countries have laws under which a patent
owner may be compelled to grant
licenses for the use of the patented technology to other parties. In addition, many countries
limit the enforceability of patents against other parties, including government agencies or government contractors. In these
countries, a patent owner may
have limited remedies, which could diminish the value of a patent in those countries. Further, the
laws of some countries do not protect intellectual property rights to the same extent as the laws of the United States, particularly
in the field of
medical products, and effective enforcement in those countries may not be available. The ability of others to market
comparable products could adversely affect our business.
We are not able to protect our intellectual property rights in all countries.
Filing, prosecuting, maintaining, and defending patents on each of our products in all countries throughout the world
would be prohibitively
expensive, and thus our intellectual property rights outside the United States and Europe are limited. In
addition, the laws of some foreign countries, especially developing countries, such as China, do not protect intellectual property
rights to
the same extent as federal and state laws in the United States. Also, it may not be possible to effectively enforce
intellectual property rights in some countries at all or to the same extent as in the United States and other countries.
Consequently, we are unable to prevent third parties from using our inventions in all countries, or from selling or importing
products made using our inventions in the jurisdictions in which we do not have (or are unable to effectively enforce)
patent
protection. Competitors may use our technologies in jurisdictions where we have not obtained patent protection to develop,
market or otherwise commercialize their own products, and we may be unable to prevent those competitors from importing
those
infringing products into territories where we have patent protection, but enforcement may not be as strong as in the United States.
These products may compete with our products and our patents and other intellectual property rights may not be
effective or
sufficient to prevent them from competing in those jurisdictions. Moreover, strategic partners, competitors, or others in the chain
of commerce may raise legal challenges against our intellectual property rights or may infringe upon
our intellectual property
rights, including through means that may be difficult to prevent or detect.
Many companies have encountered significant problems in protecting and defending intellectual property rights in foreign
jurisdictions.
Proceedings to enforce our patent rights in the United States or foreign jurisdictions could result in substantial costs
and divert our efforts and attention from other aspects of our business, could put our patents at risk of being invalidated or
interpreted narrowly and our patent applications at risk of not issuing, and could provoke third parties to assert patent
infringement or other claims against us. We may not prevail in any lawsuits that we initiate, and the damages or other
remedies
awarded, if any, may not be commercially meaningful. Accordingly, our efforts to enforce our intellectual property rights in the
United States and around the world may be inadequate to obtain a significant commercial advantage from the
intellectual
property that we develop or license from third parties.
48
We may be subject to patent infringement claims, which could result in substantial costs and liability and prevent us from
commercializing our current and future products.
The medical device industry is characterized by competing intellectual property and a substantial amount of litigation
over patent rights. Our
competitors in both the United States and abroad, many of which have substantially greater resources and
have made substantial investments in competing technologies, have been issued patents and filed patent applications with respect
to their
products and processes and may apply for other patents in the future. The large number of patents, the rapid rate of new
patent issuances, and the complexities of the technology involved increase the risk of patent litigation.
Determining whether a product infringes a patent involves complex legal and factual issues and the outcome of patent
litigation is often
uncertain. Even though we have conducted research of issued patents, no assurance can be given that patents
containing claims covering our products, technology or methods do not exist, have not been filed or could not be filed or issued.
In
addition, because patent applications can take years to issue and because publication schedules for pending applications vary
by jurisdiction, there may be applications now pending of which we are unaware, and which may result in issued patents
that our
current or future products infringe. Also, because the claims of published patent applications can change between publication and
patent grant, published applications that initially do not appear to be problematic may issue with claims
that potentially cover our
products, technology, or methods.
Infringement actions and other intellectual property claims brought against us, whether with or without merit, may cause
us to incur substantial
costs and could place a significant strain on our financial resources, divert the attention of management,
and harm our reputation. We cannot be certain that we will successfully defend against any allegations of infringement. If we are
found to
infringe another party’s patents, we could be required to pay damages. We could also be prevented from selling our
infringing products, unless we can obtain a license to use the technology covered by such patents or can redesign our products so
that they do not infringe. A license may be available on commercially reasonable terms or none at all, and we may not be able to
redesign our products to avoid infringement. Further, any modification to our products could require us to conduct
clinical trials
and revise our filings with the FDA and other regulatory bodies, which would be time consuming and expensive. In these
circumstances, we may not be able to sell our products at competitive prices or at all, and our business and
operating results could
be harmed.
We rely on trademark protection to distinguish our products from the products of our competitors.
We rely on trademark protection to distinguish our products from the products of our competitors. We currently hold
a
registered trademark in the United States, Europe, Israel, and the United Kingdom, for the mark ReWalk®. We currently hold a
registered trademark in United States, Europe and the United Kingdom for the mark ReStore®. We currently hold the
trademarks
Alter G™ and Anti-Gravity Treadmill™ in the United States, Canada, and . The trademark Alter G™ is also held in the United
Kingdom and Europe. We currently hold the registered trademark Defy Gravity® in the United States. We also hold
a registered
trademark for Lifeward® in Europe, the United Kingdom, and Israel. The application to register the trademark Lifeward™ is
pending in the United States. In jurisdictions where we have not registered our trademark and are using it, and
as permitted by
applicable local law, we rely on common law trademark protection. Third parties may oppose our trademark applications, or
otherwise challenge our use of the trademarks, and may be able to use our trademarks in jurisdictions where
they are not
registered or otherwise protected by law. If our trademarks are successfully challenged or if a third party is using confusingly
similar or identical trademarks in particular jurisdictions before we do, we could be forced to rebrand
our products, which could
result in loss of brand recognition, and could require us to devote additional resources to marketing new brands. If others are able
to use our trademarks, our ability to distinguish our products may be impaired, which
could adversely affect our business.
Further, we cannot assure you that competitors will not infringe upon our trademarks, or that we will have adequate resources to
enforce our trademarks.
We may be subject to damages resulting from claims that our employees or we have wrongfully used or disclosed alleged trade
secrets of their former employers.
Many of our employees were previously employed at other medical device companies, including our competitors or
potential competitors, and we may
hire employees in the future that are so employed. We could in the future be subject to claims
that these employees, or we, have inadvertently or otherwise used or disclosed trade secrets or other proprietary information of
their former employers.
If we fail in defending against such claims, a court could order us to pay substantial damages and
prohibit us from using technologies or features that are found to incorporate or be derived from the trade secrets or other
proprietary information
of the former employers. If any of these technologies or features that are important to our products, this
could prevent us from selling those products and could have a material adverse effect on our business. Even if we are successful
in defending
against these claims, such litigation could result in substantial costs and divert the attention of management.
49
Risks Related to Ownership of Our Ordinary Shares
Sales of a substantial number of ordinary shares by us or our large shareholders, certain of whom may have registration
rights, or dilutive exercises of a substantial number of warrants by our warrant-holders could adversely affect the value of our
ordinary shares.
Sales by us or our shareholders of a substantial number of ordinary shares in the public market, or the perception that
these sales might occur,
could cause the value of our ordinary shares to decline or could impair our ability to raise capital through
a future sale of our equity securities. Additionally, dilutive exercises of a substantial number of warrants by our warrant-holders,
or the
perception that such exercises may occur, could put downward price on the market price of our ordinary shares.
As of March 7, 2025, 4,288,801 ordinary shares were issuable pursuant to the exercise of warrants, with exercise prices
ranging from $2.75 to
$32.05 per warrant, issued in private and registered offerings of ordinary shares and warrants in July 2020,
December 2020, February 2021, September 2021 and January 2025. We have registered with the SEC all of these warrants and/or
the resale of
the shares issuable upon their exercise. There were also 953 ordinary shares issuable pursuant to the exercise of
warrants granted to Kreos Capital V (Expert Fund) Limited (“Kreos”), in connection with the loan agreement we signed with
Kreos on
December 30, 2015 (the “Loan Agreement”) in January and December 2016, with an exercise price that is set to $52.50
per warrant. For more information, “Part I, Item 2. Management’s Discussion and Analysis of Financial Condition and Results of
Operations—Liquidity and Capital Resources—Equity Raises”, below.
All shares sold pursuant to an offering covered by a registration statement would be freely transferable. With respect to
the outstanding
warrants, there may be certain restrictions on the holders to sell the underlying ordinary shares to the extent they
are restricted securities, held by “affiliates” or would exceed certain ownership thresholds. Certain of our largest shareholders,
may also have limitations under Rule 144 under the Securities Act on the resale of certain ordinary shares they hold unless they
are registered for resale under the Securities Act. Despite these limitations and the liquidity that we may gain from
cash exercises
of outstanding warrants, if we, our existing shareholders, or their affiliates sell a substantial number of the above-mentioned
ordinary shares in the public market, the market price of our ordinary shares could decrease
significantly. Shareholders may also
incur substantial dilution if holders of our warrants exercise their warrants to purchase ordinary shares, which could lower the
market price of our ordinary shares. Any such decrease could impair the value of
your investment in us.
Future grants of ordinary shares under our equity incentive plans to our employees, non-employee directors and consultants,
or
sales by these individuals in the public market, could result in substantial dilution, thus decreasing the value of your
investment in our ordinary shares, and certain grants may also require shareholder approval. In addition, stockholders will
experience dilution upon the exercise of outstanding warrants.
We have historically used, and continue to use, our ordinary shares as a means of both rewarding our employees, non-
employee directors, and
consultants and aligning their interests with those of our shareholders. As of August 19, 2024, we could
not grant any awards under our 2014 Incentive Compensation Plan, as amended. As of December 31, 2024, 331,816 ordinary
shares were subject to
outstanding awards (consisting of outstanding options to purchase 4,573 ordinary shares and 327,243
ordinary shares underlying unvested RSUs). For more information, see Note 9b to our consolidated financial statements for the
year ended December
31, 2024, below.
Additionally, to the extent registered on a Form S-8, ordinary shares granted or issued under our equity incentive plans
will, subject to vesting
provisions, lock-up restrictions, and Rule 144 volume limitations applicable to our “affiliates,” be
available for sale in the open market immediately upon registration. Further, as of December 31, 2024, there were 2,380,701
ordinary shares
underlying issued and outstanding warrants, which if exercised for ordinary shares, could decrease the net
tangible book value of our ordinary shares and cause dilution to our existing shareholders. Sales of a substantial number of the
above-mentioned ordinary shares in the public market could result in a significant decrease in the market price of our ordinary
shares and have a material adverse effect on an investment in our ordinary shares.
50
If we are unable to offer our key management personnel long-term incentive compensation, including options, and restricted
stock units, as part of their total compensation package, we may have difficulty retaining such personnel, which would
adversely affect our operations and financial performance.
As previously disclosed, in connection with our 2024 Annual Meeting of Shareholders (the “2024 Annual Meeting”), our
proposal to adopt a new
equity incentive plan did not receive the requisite shareholder approval. Further, we intended to hold an
Extraordinary General Meeting of Shareholders in January 2025 to adopt a new equity incentive plan. However, we ultimately
cancelled such
meeting. We intend to present a proposal for a new equity plan at a subsequent meeting in 2025, but no assurances
can be made that such proposal will receive the requisite shareholder approval. If we are limited in our ability to grant equity
compensation awards, we will need to explore offering other compelling alternatives to supplement our compensation, including
long-term cash compensation plans or significantly increased short-term cash compensation, in order to continue to attract
and
retain key management personnel. If we used these alternatives to long-term equity awards, our compensation costs could
increase and our financial performance could be adversely affected. If we are unable to offer key management personnel
long-
term incentive compensation, including stock options or restricted stock units, as part of their total compensation package, we
may have difficulty attracting and retaining such personnel, which would adversely affect our operations and
financial
performance.
If we do not meet the expectations of equity research analysts, if any, if the equity analysts following our business do not
continue to publish research or reports about our business, or if the analyst issues unfavorable commentary or a downgrade
of the rating on our ordinary shares, the price of our ordinary shares could decline. Additionally, we may fail to meet
publicly
announced financial guidance or other expectations about our business, which could cause our ordinary shares to decline in
value.
There are currently three equity analysts publishing research reports about our business, and we are currently seeking to
attract additional
coverage. If our results of operations are below the analysts’ consensus financial estimates, our share price
could decline. Moreover, the price of our ordinary shares could decline if one or more securities analysts downgrade the rating on
our
ordinary shares or if analysts issue other unfavourable commentary or stop publishing research or reports about us or our
business (as has occurred over time, with a decrease in the number of analysts following us from five in 2014 to one in 2022).
Given that there are only three analysts that currently cover our business, we face an increased risk that the evaluation of our
business by any one of the analysts, if less than positive, will cause a larger decline in our stock price than would
otherwise be the
case if we had a greater number of analysts covering our business.
From time to time, we have also faced difficulty accurately projecting our earnings and have missed certain of our
publicly announced guidance. If
our financial results for a particular period do not meet our guidance or if we reduce our
guidance for future periods, the market price of our ordinary shares may decline.
We are a “smaller reporting company” and the reduced reporting requirements applicable to such companies may make our
ordinary
shares less attractive to investors.
We are a “smaller reporting company” as defined in Item 10(f)(1) of Regulation S-K, which allows us to take advantage
of certain scaled disclosure
requirements available specifically to smaller reporting companies. For example, we may continue to
use reduced compensation disclosure obligations, and, provided we are also a “non-accelerated filer,” we will not be obligated to
follow the auditor
attestation requirements of Section 404 of the Sarbanes-Oxley Act. We will remain a smaller reporting
company until the last day of the fiscal year in which we have at least $100 million in revenue and at least $700 million in
aggregate market
value of ordinary shares held by non-affiliated persons and entities (known as “public float”), or, alternatively,
if our revenue exceed $100 million, until the last day of the fiscal year in which our public float was at least $250.0 million (in
each case, with respect to public float, as measured as of the last business day of the second quarter of such fiscal year). For the
year ended December 31, 2024, we recorded revenue of approximately $25.7 million.
We cannot predict or otherwise determine if investors will find our securities less attractive as a result of our reliance on
exemptions as a
smaller reporting company and/or “non-accelerated filer.” If some investors find our securities less attractive as a
result, there may be a less active trading market for our ordinary shares and the price of our ordinary shares may be more
volatile.
51
We are subject to ongoing costs and risks associated with determining whether our existing internal controls over financial
reporting systems are compliant with Section 404 of the Sarbanes-Oxley Act, and if we fail to achieve and maintain adequate
internal controls it could have a material adverse effect on our stated results of operations and harm our reputation.
We are required to comply with the internal control, evaluation, and certification requirements of Section 404 of the
Sarbanes-Oxley Act and the
Public Company Accounting Oversight Board, which requires us to furnish a report by management
on, among other things, the effectiveness of our internal control over financial reporting. Once we no longer qualify as a “smaller
reporting company”
and “non-accelerated filer,” our independent registered public accounting firm will need to attest to the
effectiveness of our internal control over financial reporting under Section 404. When our independent registered public
accounting firm is
required to undertake an assessment of our internal control over financial reporting, the cost of our compliance
with Section 404 will correspondingly increase. Our compliance with applicable provisions of Section 404 will require that we
incur
substantial accounting expense and expend significant management time on compliance-related issues as we implement
additional corporate governance practices and comply with reporting requirements. Moreover, if we are not able to comply with
the
requirements of Section 404 applicable to us in a timely manner, or if we or our independent registered public accounting firm
identifies deficiencies in our internal control over financial reporting that are deemed to be material weaknesses, the
market price
of our stock could decline and we could be subject to sanctions or investigations by the SEC or other regulatory authorities,
which would require additional financial and management resources.
The process of determining whether our existing internal controls over financial reporting systems are compliant with
Section 404 and whether
there are any material weaknesses or significant deficiencies in our existing internal controls requires
the investment of substantial time and resources, including by our Chief Financial Officer and other members of our senior
management. This
determination and any remedial actions required could divert internal resources and take a significant amount
of time and effort to complete and could result in us incurring additional costs that we did not anticipate, including the hiring of
outside consultants. We could experience higher than anticipated operating expenses and higher independent auditor fees during
and after the implementation of these changes.
Irrespective of compliance with Section 404, any failure of our internal controls could have a material adverse effect on
our stated results of
operations and harm our reputation. If we are unable to implement any of the required changes to our internal
control over financial reporting effectively or efficiently or are required to do so earlier than anticipated, it could adversely affect
our operations, financial reporting and/or results of operations and could result in an adverse opinion on internal controls from
our management and our independent auditors. Further, if our internal control over financial reporting is not
effective, the
reliability of our financial statements may be questioned, and our share price may suffer.
U.S. holders of our ordinary shares may suffer adverse U.S. tax
consequences if we are characterized as a passive foreign
investment company, or a PFIC, under Section 1297(a) of the Code.
Generally, if for any taxable year 75% or more of our gross income is passive income, or at least 50% of the average
quarterly value of our assets
(which may be determined in part by the market value of our ordinary shares, which is subject to
change) are held for the production of, or produce passive income, we would be characterized as a passive foreign investment
company, or PFIC, for U.S.
federal income tax purposes. Passive income for this purpose generally includes, among other things,
certain dividends, interest, royalties, rents, and gains from commodities and securities transactions and from the sale or exchange
of property
that gives rise to passive income. Passive income also includes amounts derived by reason of the temporary
investment of funds, including those raised in an offering. In determining whether a non-U.S. corporation is a PFIC, a
proportionate share of
the income and assets of each corporation in which it owns, directly or indirectly, at least a 25% interest
(by value) is taken into account.
The determination of whether we are a PFIC will depend on the nature and composition of our income and the nature,
composition, and value of our
assets from time to time. The 50% passive asset test described above is generally based on the fair
market value of each asset, with the value of goodwill and going concern value determined in large part by reference to the
market value of our
ordinary shares, which may be volatile. If we are characterized as a “controlled foreign corporation,” or a
“CFC”, under Section 957(a) of the Code and not considered publicly traded throughout the relevant taxable year, however, the
passive asset
test may be applied based on the adjusted tax bases of our assets instead of the fair market value of each asset (as
described above). However, if we are treated as publicly traded for at least 20 trading days during the relevant taxable year, our
assets would generally be required to be measured at their fair market value, even if we are a CFC.
52
Based on our gross income and assets, the market price of our ordinary shares, and the nature of our business, we believe
that we were not a PFIC
for the taxable year ended December 31, 2024. However, this determination is subject to uncertainty. In
addition, there is a significant risk that we may be a PFIC for future taxable years, unless the market price of our ordinary shares
increases,
or we reduce the amount of cash and other passive assets we hold relative to the amount of non-passive assets we hold.
Accordingly, no assurances can be made regarding our PFIC status in one or more subsequent years, and we express no opinion
with
respect to our PFIC status in the taxable year ended December 31, 2024, or the current year 2025, and also expresses no
opinion with respect to our predictions or past determinations regarding our PFIC status in the past or in the future.
If we are characterized as a PFIC, U.S. holders of our ordinary shares may suffer adverse tax consequences, including
having gains realized on the
sale of our ordinary shares treated as ordinary income, rather than capital gain, the loss of the
preferential tax rate applicable to dividends received on our ordinary shares by individuals who are U.S. holders and having
interest charges apply to
distributions by us and to the proceeds of sales of our ordinary shares. In addition, special information
reporting may be required. Certain elections exist that may alleviate some of the adverse consequences of PFIC status and would
result in an
alternative treatment (such as mark-to-market treatment or being able to make a qualified electing fund election).
However, we do not intend to provide the information necessary for U.S. Holders to make qualified electing fund elections if we
are
classified as a PFIC.
Additionally, if we are characterized as a PFIC, for any taxable year during which a U.S. holder holds ordinary shares, we
generally will continue
to be treated as a PFIC with respect to such U.S. holder for all succeeding years during which such U.S.
holder holds ordinary shares unless we cease to be a PFIC and such U.S. holder makes a “deemed sale” election with respect to
such ordinary
shares. If such election is made, such U.S. holder will be deemed to have sold such ordinary shares held by such
U.S. holder at their fair market value on the last day of the last taxable year in which we qualified as a PFIC, and any gain from
such
deemed sale would be treated as described above.
Each U.S. holder of our ordinary shares is strongly urged to consult his, her or its tax advisor regarding the application of
these rules and the
availability of any potential elections.
The price of our ordinary shares may be volatile, and you may lose all or part of your investment.
The market price of our ordinary shares has been in the past, and could continue to be, highly volatile and may fluctuate
substantially as a
result of many factors. Moreover, while there is no established public trading market for the warrants offered in
our follow-on public offerings, and we do not expect one to develop, our ordinary shares will be issuable pursuant to exercise of
these warrants. Because the warrants are exercisable into our ordinary shares, volatility, or a reduction in the market price of our
ordinary shares could have an adverse effect on the trading price of the warrants. Factors which may cause
fluctuations in the
price of our ordinary shares include, but are not limited to:
●
actual or anticipated fluctuations in our growth rate or results of operations or those of our competitors;
●
customer acceptance of our products;
●
announcements by us or our competitors of new products or services, commercial relationships, acquisitions, or expansion plans;
●
announcements by us or our competitors of other material developments;
●
our involvement in litigation;
●
changes in government regulation applicable to us and our products;
●
sales, or the anticipation of sales, of our ordinary shares, warrants and debt securities by us, or sales of our ordinary shares by our insiders
or other shareholders, including upon expiration of contractual lock-up agreements;
53
●
developments with respect to intellectual property rights;
●
competition from existing or new technologies and products;
●
changes in key personnel;
●
the trading volume of our ordinary shares;
●
changes in the estimation of the future size and growth rate of our markets;
●
changes in our quarterly or annual forecasts with respect to operating results and financial conditions;
●
general economic and market conditions and;
●
announcements regarding business acquisitions.
In addition, the stock markets have experienced extreme price and volume fluctuations. Broad market and industry factors
may materially harm the
market price of our ordinary shares, regardless of our operating performance. Technical factors in the
public trading market for our ordinary shares may produce price movements that may or may not comport with macro, industry
or
Company-specific fundamentals, including, without limitation, the sentiment of retail investors (including as may be expressed
on financial trading and other social media sites), the amount and status of short interest in our securities, access to
margin debt,
trading in options and other derivatives on our ordinary shares and any related hedging or other technical trading factors. In the
past, following periods of volatility in the market price of a company’s securities, securities class
action litigation has often been
instituted against that company, as was the case for ReWalk in a securities class action dismissed in full in November 2020. If we
become involved in any similar litigation, we could incur substantial costs and our
management’s attention and resources could
be diverted.
Risks Related to Our Incorporation and Location in Israel
Conditions in Israel, including Israel's wars against Hamas and other terrorist organizations in
the Gaza Strip and against
Hezbollah on Israel's northern border, may materially and adversely affect our business and results of operations.
We are incorporated under the laws of the State of Israel, and certain of our facilities, primarily of the operations,
quality,
and R&D functions of the legacy ReWalk business and some finance functions, are located in Israel. Accordingly, political,
economic and military conditions in Israel and the surrounding region directly affect our business and
operations and could
materially and adversely affect our ability to continue to operate from Israel. Since the State of Israel was established in 1948, a
number of armed conflicts have occurred between Israel and its Arab neighbors. Terrorism and
violence within Israel or the
outbreak of conflicts between Israel and its neighbors, including the Palestinians, Iran, and terrorist organizations operating in the
region, may adversely affect our business, operations, or personnel. Most recently,
on October 7, 2023, Hamas, a terrorist
organization primarily based in the Gaza Strip, launched a series of attacks on Israel. As a result of such attacks, on October 8,
2023, Israel officially declared a state of war. Israel called up substantial
numbers of reservists and responded with extensive
aerial attacks and a broad ground attack on terrorist targets in Gaza. The hostilities continued until a ceasefire between the sides
took effect in mid-January 2025, but there is no certainty that
this ceasefire will be sustained.
Following the attack by Hamas on Israel’s southern border, Hezbollah, a terrorist organization based primarily in
Lebanon,
also launched missile, rocket, and shooting attacks against Israeli military sites, troops, and civilian areas in northern
Israel. In response to these attacks, the Israeli army initially carried out targeted strikes on Hezbollah in southern
Lebanon and
targets in Syria, followed by a ground incursion into southern Lebanon beginning in late September 2024. A ceasefire between
Israel and Hezbollah came into effect in late November 2024, but there is no certainty that this ceasefire will
be sustained.
Iran also joined the hostilities with several significant missile attacks against Israel, and the Houthis, a terrorist
organization based in Yemen, fired missiles at Israel and sent unmanned aerial vehicles carrying explosives to Israel. Terrorist
groups have also attacked U.S. military targets in the Middle East. These clashes may escalate into a greater regional
conflict.
Although the current conflict in Israel has not materially impacted our business or operations as of the date of this
Annual
Report, the conflict is rapidly evolving and developing and it is not possible to predict its long-term consequences, which could
include further regional instability, geopolitical shifts and adverse effects on trade between Israel and its
trading partners,
macroeconomic conditions, security conditions and financial markets. Any escalation and expansion of this conflict could have a
negative impact on both global and regional conditions and may adversely affect our business,
financial condition and results of
operations. Additionally, in the event that our facilities in northern Israel are damaged as a result of hostile action or that
hostilities otherwise disrupt the ongoing operation of our facilities, our ability to
continue our operations could be materially
adversely affected.
Further, in the past, the State of Israel and Israeli companies have been subjected to economic boycotts. Several
countries
still restrict doing business with Israel and Israeli companies, and additional countries may impose restrictions on doing business
with Israel and Israeli companies as a result of hostilities in Israel or political instability in the
region. In addition, prior to the
terrorist attack in October 2023, the Israeli government pursued extensive changes to Israel’s judicial system, which sparked
extensive political debate and unrest. These political events and policies, or a
significant downturn in the economic or financial
condition of Israel, could materially and adversely affect our operations and product development.
Many of our employees and independent contractors who reside in Israel are
required to perform military reserve duty,
which may disrupt their work for us.
Approximately 23% of our employees are located in Israel. Many of our employees and independent contractors in Israel
may be called upon to perform several days of military reserve duty annually until they reach the age of 40 (and in some cases,
depending on their military duties up to the age of 45 or even 49) and, in emergency circumstances, could be called to
immediate
and unlimited active duty (subject to approval by the Israeli government). Although to date none of our Israeli employees have
been mobilized for emergency military service, we cannot predict whether there will be further mobilization of
reservists and any
further mobilization could further impact our employees, including employees who serve in critical roles in our company, which
materially and adversely affect our business, financial condition and results of operations.
54
Our technology development and quality headquarters and the manufacturing facility for our ReWalk products are located in
Israel and, therefore, our results may be adversely affected by economic restrictions imposed on, and political and military
instability in, Israel.
Our technology development and quality headquarters, which houses substantially all of our research and development
and our core research and
development team, including engineers, machinists, and quality and regulatory personnel, as well as
the facility of our contract manufacturer, Sanmina, are located in Israel. Many of our employees, directors and officers are
residents of Israel.
Accordingly, political, economic, and military conditions in Israel and the surrounding region may directly
affect our business. Since the establishment of the State of Israel in 1948, a number of armed conflicts have taken place between
Israel and
its Arab neighbors, Hamas, Hezbollah and other armed groups. Any hostilities involving Israel or the interruption or
curtailment of trade within Israel or between Israel and its trading partners could materially and adversely affect our business,
financial condition and results of operations and could make it more difficult for us to raise capital. In particular, an interruption
of operations at the Tel Aviv airport related to the conflict in the Gaza Strip or otherwise could prevent or
delay shipments of our
components or products. Although we maintain inventory in the United States and Germany, an extended interruption could
materially and adversely affect our business, financial condition, and results of operations.
Recent political uprisings, social unrest, and violence in various countries in the Middle East and North Africa, including
Israel’s neighbors
Syria and Lebanon, are affecting the political stability of those countries. This instability may lead to
deterioration of the political relationships that exist between Israel and these countries and has raised concerns regarding security
in the
region and the potential for armed conflict. Our commercial insurance covers some, but not all, losses that may occur as a
result of an event associated with the security situation in the Middle East. Any losses or damages incurred by us could have
a
material adverse effect on our business. In addition, Iran has threatened to attack Israel and is widely believed to be developing
nuclear weapons. Iran is also believed to have a strong influence among parties hostile to Israel in areas that
border Israel, such as
Hamas in Gaza and Hezbollah in Lebanon. Any armed conflicts, terrorist activities or political instability in the region could
materially and adversely affect our business, financial condition, and results of operations.
Our operations and the operations of our contract manufacturer, Sanmina, may be disrupted as a result of the obligation of
Israeli citizens to perform military service.
Many Israeli citizens are obligated to perform one month, and in some cases more, of annual military reserve duty until
they reach the age of 45
(or older, for reservists with certain occupations) and, in the event of a military conflict, may be called to
active duty. In response to terrorist activity, there have been periods of significant call-ups of military reservists. Some of our
executive officers and employees, as well as those of Sanmina, the manufacturer of all of our ReWalk products, are required to
perform annual military reserve duty in Israel and may be called to active duty at any time under emergency
circumstances. As
described in the risk factor above entitled “Conditions in Israel, including Israel’s wars against Hamas and other terrorist
organizations in the Gaza Strip and against Hezbollah on Israel’s northern border, may materially and
adversely affect our
business and results of operations,” in response to the attacks by Hamas and Hezbollah on Israel in October 2023 Israel has called
up substantial numbers of reservists. Although to date these call-ups have not had a material
impact on our operations or on
Sanmina’s ability to manufacture our products, we cannot predict whether there will be further mobilization of reservists and our
operations and the operations of Sanmina could be disrupted by such call-ups.
Our sales may be adversely affected by boycotts of Israel.
Several countries, principally in the Middle East, restrict doing business with Israel and Israeli companies, and additional
countries may impose
restrictions on doing business with Israel and Israeli companies whether as a result of hostilities in the
region or otherwise. In addition, there have been increased efforts by activists to cause companies and consumers to boycott
Israeli goods
based on Israeli government policies. Such actions, particularly if they become more widespread, may adversely
impact our ability to sell our products.
55
The tax benefits that are available to us require us to continue to meet various conditions and may be terminated or reduced
in the future, which could increase our costs and taxes.
Some of our operations in Israel, referred to as “Beneficiary Enterprises,” carry certain tax benefits under the Israeli Law
for the Encouragement
of Capital Investments, 5719-1959, or the Investment Law. Substantially all of our future income before
taxes can be attributed to these programs. If we do not meet the requirements for maintaining these benefits or if our assumptions
regarding the
key elements affecting our tax rates are rejected by the tax authorities, they may be reduced or cancelled, and the
relevant operations would be subject to Israeli corporate tax at the standard rate. In addition to being subject to the standard
corporate tax rate, we could be required to refund any tax benefits that we may receive in the future, plus interest and penalties
thereon. Even if we continue to meet the relevant requirements, the tax benefits that our current “Beneficiary
Enterprises” receive
may not be continued in the future at their current levels or at all. If these tax benefits were reduced or eliminated, the amount of
taxes that we pay would likely increase, as all of our Israeli operations would consequently
be subject to corporate tax at the
standard rate, which could adversely affect our results of operations. Additionally, if we increase our activities outside of Israel,
for example, by way of acquisitions, our increased activities may not be
eligible for inclusion in Israeli tax benefit programs. For
a discussion of our current tax obligations, see “Part II. Item 7, Management’s Discussion and Analysis of Financial Condition
and Results of Operations.”
We have received Israeli government grants for certain of our research and development activities and we may receive
additional grants in the future. The terms of those grants restrict our ability to manufacture products or transfer technologies
outside of Israel, and we may be required to pay penalties in such cases or upon the sale of our company.
From our inception through December 31, 2024, we received a total of $2.8 million from the IIA. We may in the
future
apply to receive additional grants from the IIA to support our research and development activities. With respect to some grants
that were royalty-bearing grants, we are committed to paying royalties at a rate of 3.0% on sales proceeds up
to the total amount
of grants received, linked to the dollar, and bearing interest at an annual rate of SOFRPR applicable to dollar deposits. Even after
payment in full of these amounts, we will still be required to comply with the requirements
of the Israeli Encouragement of
Industrial Research, Development and Technological Innovation Law, 1984, or the R&D Law, and related regulations, with
respect to those past grants. When a company develops know-how, technology or products
using IIA grants, the terms of these
grants and the R&D Law restrict the transfer outside of Israel of such know-how, and of the manufacturing or manufacturing
rights of such products, technologies, or know-how, without the prior approval of
the IIA. Therefore, if aspects of our
technologies are deemed to have been developed with IIA funding, the discretionary approval of an IIA committee would be
required for any transfer to third parties outside of Israel of know-how or
manufacturing or manufacturing rights related to those
aspects of such technologies. Furthermore, the IIA may impose certain conditions on any arrangement under which it permits us
to transfer technology or development out of Israel or may not
grant such approvals at all.
Furthermore, the consideration available to our shareholders in a future transaction involving the transfer outside of Israel
of technology or
know-how developed with IIA funding (such as a merger or similar transaction) may be reduced by any
amounts that we are required to pay to the IIA.
In addition to the above, any non-Israeli citizen, resident or entity that, among other things, (i) becomes a holder of 5% or
more of our share
capital or voting rights, (ii) is entitled to appoint one or more of our directors or our chief executive officer or
(iii) serves as one of our directors or as our chief executive officer (including holders of 25% or more of the voting power,
equity
or the right to nominate directors in such direct holder, if applicable) is required to notify the IIA and undertake to comply with
the rules and regulations applicable to the grant programs of the IIA, including the restrictions on transfer
described above. Such
notification will be required in connection with the investment being made by an investor which may discourage or limit
investments from foreign investors in our company.
We may become subject to claims for remuneration or royalties for assigned service invention rights by our employees, which
could result in
litigation and adversely affect our business.
A significant portion of our intellectual property has been developed by our employees in the course of their employment
for us. Under the Israeli
Patent Law, 5727-1967 (the “Patent Law”) and recent decisions by the Israeli Supreme Court and the
Israeli Compensation and Royalties Committee, a body constituted under the Patent Law, employees may be entitled to
remuneration for intellectual
property that they develop for us unless they explicitly waive any such rights. Although we enter
into agreements with our employees pursuant to which they agree that any inventions created in the scope of their employment or
engagement are owned
exclusively by us, we may face claims demanding remuneration. As a consequence of such claims, we
could be required to pay additional remuneration or royalties to our current and former employees, or be forced to litigate such
claims, which could
negatively affect our business.
56
Provisions of Israeli law and our Articles of Association may delay, prevent, or otherwise impede a merger with, or an
acquisition of, us, even when the terms of such a transaction are favorable to us and our shareholders.
Israeli corporate law regulates mergers, requires tender offers for acquisitions of shares above specified thresholds,
requires special approvals
for transactions involving directors, officers or significant shareholders and regulates other matters that
may be relevant to such types of transactions. For example, a tender offer for all of a company’s issued and outstanding shares
can only be
completed if the acquirer receives positive responses from the holders of at least 95% of the issued share capital.
Completion of the tender offer also requires approval of a majority of the offerees that do not have a personal interest in the
tender offer, unless at least 98% of the company’s outstanding shares are tendered. Furthermore, the shareholders, including those
who indicated their acceptance of the tender offer (unless the acquirer stipulated in its tender offer that a
shareholder that accepts
the offer may not seek appraisal rights), may, at any time within six months following the completion of the tender offer, petition
an Israeli court to alter the consideration for the acquisition. Israeli law also requires
a “special tender offer” in certain cases
where a shareholder crosses the 25% or 45% holding threshold, and it imposes procedural and special voting requirements for the
approval of a merger in certain cases.
Our Articles of Association provide that our directors (other than external directors, a requirement of Israeli corporate law
from which we have
opted out in accordance with an exemption for which we are currently eligible) are elected on a staggered
basis, such that a potential acquirer cannot readily replace our entire board of directors at a single annual general shareholder
meeting.
This could prevent a potential acquirer from receiving board approval for an acquisition proposal that our board of
directors opposes.
Furthermore, Israeli tax considerations may make potential transactions unappealing to us or to our shareholders whose
country of residence does
not have a tax treaty with Israel exempting such shareholders from Israeli tax. For example, Israeli tax
law does not recognize tax-free share exchanges to the same extent as U.S. tax law. With respect to mergers involving an
exchange of shares,
Israeli tax law allows for tax deferral in certain circumstances but makes the deferral contingent on the
fulfilment of a number of conditions, including, in some cases, a holding period of two years from the date of the transaction
during which
sales and dispositions of shares of the participating companies are subject to certain restrictions. Moreover, with
respect to certain share swap transactions, the tax deferral is limited in time, and when such time expires, the tax becomes
payable
even if no disposition of the shares has occurred. These and other similar provisions could delay, prevent or impede an
acquisition of us or our merger with another company, even if such an acquisition or merger would be beneficial to us or to our
shareholders.
It may be difficult to enforce a judgment of a U.S. court against us, our officers, and directors, to assert U.S. securities
laws
claims in Israel or to serve process on our officers and directors.
We are incorporated in Israel. Although the majority of our directors and executive officers reside within the United States
and most of the
assets of these persons are also likely located within the United States, some of our directors and executive
officers reside and may have the majority of their assets outside the United States. Additionally, most of our assets are located
outside
of the United States. Therefore, a judgment obtained against us, or those of our directors and executive officers residing
outside of the United States, including a judgment based on the civil liability provisions of the U.S. federal securities
laws, may
not be collectible in the United States and may not be enforced by an Israeli court. It also may be difficult for you to effect service
of process in the United States on those directors and executive officers residing outside of the
United States or to assert U.S.
securities law claims in original actions instituted in Israel. Israeli courts may refuse to hear a claim based on an alleged violation
of U.S. securities laws reasoning that Israel is not the most appropriate forum
in which to bring such a claim. In addition, even if
an Israeli court agrees to hear a claim, it may determine that Israeli law and not U.S. law is applicable to the claim. If U.S. law is
found to be applicable, the content of applicable U.S. law
must be proven as a fact by expert witnesses, which can be a time-
consuming and costly process. Certain matters of procedure will also be governed by Israeli law. There is little binding case law
in Israel that addresses the matters described
above. As a result of the difficulty associated with enforcing a judgment against us
in Israel, you may be able to collect only limited, or may be unable to collect any, damages awarded by either a U.S. or foreign
court.
57
In April 2021, we amended our articles of association such that, unless we consent in writing to the selection of an
alternative forum, (i) the
federal courts of the United States will be the exclusive forum for the resolution of any claim arising
under the Securities Act, and (ii) the Tel-Aviv District Court will be the exclusive forum for (a) a derivative action or derivative
proceeding
that is filed in the name of the Company; (b) any action grounded in a breach of fiduciary duty of a director,
officeholder or other employee towards us or our shareholders; or (c) any action the cause of which results from any provision of
the
Companies Law or the Israel Securities Law, 5728-1968. We have retained the ability to consent to an alternative forum in
circumstances if we determine shareholder interests are best served by permitting a particular dispute to proceed in a forum
other
than the federal district courts or State of Israel, as applicable. However, there is uncertainty as to whether a court would enforce
these provisions.
Your rights and responsibilities as a shareholder will be governed by Israeli law, which differs in some material respects
from
the rights and responsibilities of shareholders of U.S. companies.
The rights and responsibilities of the holders of our ordinary shares are governed by our Articles of Association and by
Israeli law. These rights
and responsibilities differ in some material respects from the rights and responsibilities of shareholders in
U.S.-based corporations. In particular, a shareholder of an Israeli company has a duty to act in good faith and in a customary
manner in
exercising its rights and performing its obligations towards the company and other shareholders, and to refrain from
abusing its power in the company, including, among other things, in voting at a general meeting of shareholders on matters such
as
amendments to a company’s articles of association, increases in a company’s authorized share capital, mergers and acquisitions
and related party transactions requiring shareholder approval. In addition, a shareholder who is aware that it possesses
the power
to determine the outcome of a shareholder vote or to appoint or prevent the appointment of a director or executive officer in the
company has a duty of fairness toward the company. There is limited case law available to assist us in
understanding the nature of
this duty or the implications of these provisions. These provisions may be interpreted to impose additional obligations and
liabilities on holders of our ordinary shares that are not typically imposed on shareholders of
U.S. corporations.
Our business could be negatively affected as a result of actions of activist shareholders, which could be disruptive and costly
and may impact
the trading value of our securities.
We value constructive input from investors and regularly engage in dialogue with our shareholders regarding strategy and
performance. While our Board of Directors and
management team welcome their views and opinions with the goal of enhancing
value for all shareholders, we may be subject to actions or proposals from activist shareholders that may not align with our
business strategies or the best interests of
all of our shareholders.
For example, in connection with our 2024 Annual Meeting, we received an email from
counsel to Creative Value Capital
Limited Partnership, which claims to be a beneficial shareholder of our company (the “Shareholder”), demanding that we add to
the agenda of the 2024 Annual Meeting the election of two candidates proposed by the
Shareholder for our Board of Directors
(the “Purported Agenda Supplement Notice”). We determined that the Purported Agenda Supplement Notice was invalid, as the
Shareholder failed to demonstrate that it owns at least 5% of our outstanding
voting power, as required by the applicable
regulations in order to nominate a candidate for director and accordingly, we rejected such Purported Agenda Supplement Notice
on those grounds as well as others. As a result, the Shareholder filed a
legal action in the Nazareth District Court (the “Court”)
seeking a judgment ordering us to add to the agenda of the 2024 Annual Meeting a proposal relating to the election of the
Shareholder’s two candidates for our Board of Directors. On
August 26, 2024, the Court held a hearing on this matter and
dismissed the Shareholder’s motion with prejudice. Also, in connection with our 2022 Annual General Meeting of Shareholders,
the Shareholder nominated two candidates for election to
our board of directors and submitted two additional proposals
(including amendments to our Articles of Association) for approval at the meeting. Although none of CVC’s proposals were
approved at the meeting, addressing and responding to such
proposals was significantly costly and time-consuming, and diverted
the attention of our management and employees.
Responding to these types of actions by activist shareholders is costly and time-consuming and may disrupt our
operations and divert the attention
of management and our employees. Such activities could interfere with our ability to execute
our strategic plan. In addition, a proxy contest for the election of directors at our annual meeting would require us to incur
significant legal fees and
proxy solicitation expenses and require significant time and attention by management and our Board of
Directors. The perceived uncertainties as to our future direction also could affect the market price and volatility of our securities.
58
General Risks
Exchange rate fluctuations between the U.S. dollar, the euro and the NIS may negatively affect our earnings.
The U.S. dollar is our functional and reporting currency. However, we pay a significant portion of our expenses in NIS
and in euro, and we expect
this to continue. As a result, we are exposed to exchange rate risks that may materially and adversely
affect our financial results. Accordingly, any appreciation of the NIS or euro relative to the U.S. dollar would adversely impact
our net loss or
net income, if any. For example, if the NIS appreciates against the U.S. dollar or if the value of the NIS declines
against the U.S. dollar at a time when the rate of inflation in the cost of Israeli goods and services exceeds the rate of decline
in
the relative value of the NIS, then the U.S. dollar cost of our operations in Israel would increase and our results of operations
could be materially and adversely affected.
Our operations also could be adversely affected if we are unable to effectively hedge against currency fluctuations in the
future.
We cannot predict any future trends in the rate of inflation in Israel or the rate of devaluation (if any) of the
NIS against
the U.S. dollar. For example, while the NIS devalued against the U.S. dollar at a rate of approximately 0.6%, 3.1% and 4% during
the fiscal year 2024, 2023 and 2022, respectively. The Israeli annual rate of inflation amounted to 3.2%,
2.96% and 5.3% for the
years ended December 31, 2024, 2023 and 2022, respectively.
We have in the past engaged in limited hedging activities, and we may enter into other hedging arrangements with
financial institutions from time
to time. Any hedging strategies that we may implement in the future to mitigate currency risks,
such as forward contracts, options and foreign exchange swaps related to transaction exposures may not eliminate our exposure
to foreign exchange
fluctuations.
We are subject to certain regulatory regimes that may affect the way that we conduct business internationally, and our failure
to comply with applicable laws and regulations could materially adversely affect our reputation and result in penalties and
increased costs.
We are subject to a complex system of laws and regulations related to international trade, including economic sanctions
and export control laws
and regulations. We also depend on our distributors and agents for compliance and adherence to local
laws and regulations in the markets in which they operate. Significant political or regulatory developments in the jurisdictions in
which we sell
our products, such as those stemming from the presidential administration in the United States or the U.K.’s exit
from the E.U., are difficult to predict and may have a material adverse effect on us. For example, in the United States, the prior
Trump administration imposed tariffs on imports from China, Mexico, Canada, and other countries, and expressed support for
greater restrictions on free trade and increase tariffs on goods imported into the United States. Changes in U.S. political,
regulatory, and economic conditions or in its policies governing international trade and foreign manufacturing and investment in
the United States could adversely affect our sales in the United States.
We are also subject to the FCPA and may be subject to similar worldwide anti-bribery laws that generally prohibit
companies and their
intermediaries from making improper payments to government officials for the purpose of obtaining or
retaining business. Despite our compliance and training programs, we cannot be certain that our procedures will be sufficient to
ensure consistent
compliance with all applicable international trade and anti-corruption laws, or that our employees or channel
partners will strictly follow all policies and requirements to which we subject them. Any alleged or actual violations of these laws
may
subject us to government scrutiny, investigation, debarment, and civil and criminal penalties, which may have an adverse
effect on our results of operations, financial condition and reputation.
Our business may be materially affected by changes to fiscal and tax policies. Potentially negative or unexpected tax
consequences of these policies, or the uncertainty surrounding their potential effects, could adversely affect our results of
operations and share price.
The rules dealing with U.S. federal, state and local income taxation are constantly under review by persons involved in
the legislative process
and by the Internal Revenue Service (the “IRS”) and the U.S. Treasury Department. Changes to tax laws
(which changes may have retroactive application) could adversely affect us or holders of our ordinary shares. In recent years,
many such changes
have been made, and changes are likely to continue to occur in the future. It cannot be predicted whether,
when, in what form or with what effective dates tax laws, regulations and rulings may be enacted, promulgated or issued, which
could result
in an increase in our or our shareholders’ tax liability or require changes in the manner in which we operate in order
to minimize or mitigate any adverse effects of changes in tax law.
59
In addition, foreign governments may enact tax laws in response to the changes in the rules dealing with U.S. federal,
state and local income
taxation or otherwise that could result in further changes to global taxation and materially affect our
financial position and results of operations. The uncertainty surrounding the effect of the reforms on our financial results and
business could
also weaken confidence among investors.
Certain U.S. holders of our ordinary shares may suffer adverse U.S. tax consequences if we are characterized as a controlled
foreign corporation, or a CFC, under Section 957 of the Code.
Each “Ten Percent Shareholder” (as defined below) in a non-U.S. corporation that is classified as a “controlled foreign
corporation,” or a CFC,
for U.S. federal income tax purposes generally is required to include in income for U.S. federal tax
purposes such Ten Percent Shareholder’s pro rata share of the CFC’s “Subpart F income,” global intangible low-taxed income,
and investment of
earnings in U.S. property, even if the CFC has made no distributions to its shareholders. Subpart F income
generally includes dividends, interest, rents and royalties, gains from the sale of securities and income from certain transactions
with
related parties. In addition, a Ten Percent Shareholder that realizes gain from the sale or exchange of shares in a CFC may
be required to classify a portion of such gain as dividend income rather than capital gain. A non-U.S. corporation
generally will
be classified as a CFC for U.S. federal income tax purposes if Ten Percent Shareholders own, directly or indirectly, more than
50% of either the total combined voting power of all classes of stock of such corporation entitled to vote
or of the total value of
the stock of such corporation. A “Ten Percent Shareholder” is a United States person (as defined by the Code), who owns or is
considered to own 10% or more of (1) the total combined voting power of all classes of stock
entitled to vote or (2) the value of
all classes of stock of such corporation. The determination of CFC status is complex and includes attribution rules, the
application of which is not entirely certain.
During our 2024 taxable year, we believe that we had one shareholder that was a Ten Percent Shareholder for U.S. federal
income tax purposes.
However, our CFC status for the taxable year ending on December 31, 2024, and our current taxable year is
unknown, and we may be a CFC for the taxable year ending on December 31, 2025, our current taxable year or a following year.
In addition,
recent changes to the attribution rules relation to the determination of CFC status may make it difficult to determine
our CFC status for any taxable year or the CFC status of any of our subsidiaries. U.S. holders should consult their own tax
advisors with respect to the potential adverse U.S. tax consequences of becoming a Ten Percent Shareholder in a CFC. If we are
classified as both a CFC and a passive foreign investment company, or PFIC, we generally will not be treated as a PFIC
with
respect to those U.S. holders that meet the definition of a Ten Percent Shareholder during the period in which we are a CFC.
If there are significant disruptions in our information technology systems, our business, financial condition, and operating
results could be adversely affected.
The efficient operation of our business depends on our information technology systems. We rely on our information
technology systems to
effectively manage sales and marketing data, accounting and financial functions, inventory management,
product development tasks, research and development data, customer service and technical support functions. Our information
technology systems
are vulnerable to damage or interruption from earthquakes, fires, floods and other natural disasters, terrorist
attacks, attacks by computer viruses or hackers, power losses, and computer system or data network failures. In addition, our data
management application is hosted by a third-party service provider whose security and information technology systems are
subject to similar risks, and our products’ systems contain software which could be subject to computer virus or hacker attacks
or
other failures.
The failure of our or our service providers’ information technology systems or our products’ software to perform as we
anticipate or our failure
to effectively implement new information technology systems could disrupt our entire operation or
adversely affect our software products and could result in decreased sales, increased overhead costs, and product shortages, all of
which could have a
material adverse effect on our reputation, business, financial condition, and operating results.
If we fail to properly manage our anticipated growth, our business could suffer.
Our growth and product expansion has placed, and we expect that it will continue to place, a significant strain on our
management team and on our
financial resources. Failure to manage our growth effectively could cause us to misallocate
management or financial resources, and result in losses or weaknesses in our infrastructure, which could materially adversely
affect our business.
Additionally, our anticipated growth will increase the demands placed on our suppliers, resulting in an
increased need for us to manage our suppliers and monitor for quality assurance. Any failure by us to manage our growth
effectively could have
an adverse effect on our ability to achieve our business objectives.
60
We are highly dependent on the knowledge and skills of our senior management, and if we are not successful in attracting
and retaining highly qualified personnel, we may not be able to successfully implement our business strategy.
Our ability to compete in the highly competitive medical devices industry depends upon our ability to attract and retain
highly qualified managerial, scientific, sales and medical personnel. We are highly dependent on our senior management team
and have benefited substantially from the leadership and performance of our senior management. For example, we depend on our
Chief Executive Officer’s experience successfully scaling an early-stage medical device company, as well as the experience of
other members of management. The loss of the services of any of our executive officers and other key employees, and our
inability to find suitable replacements could result in delays in product development and harm our business. Competition for
senior management in our industry is intense and we cannot guarantee that we will be able to retain our personnel. Additionally,
we do not carry key man insurance on any of our current executive officers. The loss of the services of certain members of our
senior management could prevent or delay the implementation and completion of our strategic objectives or divert management’s
attention to seeking qualified replacements.
Shutdowns of the U.S. federal government could materially impair our business and financial condition.
Development of our product candidates and/or regulatory approval may be delayed for reasons beyond our control. For
example, in 2018 and 2019 the U.S. government shut down several times and certain regulatory agencies, such as the FDA and
the SEC, had to furlough critical FDA, SEC, and other government employees and stop critical activities. Currently, federal
agencies in the U.S. are operating under a continuing resolution that is set to expire on March 14, 2025. Without appropriation of
additional funding to federal agencies, our business operations related to our product development activities for the U.S. market
could be impacted. If a prolonged government shutdown or budget sequestration occurs, it could significantly impact the ability
of the FDA to timely review and process our regulatory submissions, which could have a material adverse effect on our business.
Further, in our operations as a public company, future government shutdowns could impact our ability to access the public
markets, such as through the declaration of effectiveness of registration statements and obtain necessary capital in order to
properly capitalize and continue our operations.
ITEM 1B. UNRESOLVED STAFF COMMENTS
None.
ITEM 1C. CYBERSECURITY
Cybersecurity Risk Management and Strategy
We rely on information systems and the data stored on them to conduct our operations. We have adopted and maintain a cybersecurity risk
management program in accordance with our risk profile and business that is informed by and incorporates elements of industry standards.
Our cybersecurity risk management program incorporates multiple components, including, but not limited to, ongoing monitoring of critical risks
from cybersecurity threats using automated tools. Additionally, we have implemented an employee education and training program, which we provide on
an annual basis, that is designed to raise awareness of cybersecurity threats. To support our cybersecurity risk management program, we leverage managed
service providers and other third-party information technology and cybersecurity providers and consultants, including to perform regular system scans and
threat intelligence analysis. Additionally, we require certain third-party providers and consultants to adhere to contractual requirements relating to privacy
and cybersecurity standards.
We have not identified any cybersecurity incidents or threats that have materially affected us or are reasonably likely to materially affect us,
including our business strategy, results of operations, or financial condition. However, like other companies in our industry, from time to time we and our
third-party vendors have experienced threats and security incidents that could affect our information or systems. For more information, please see the
section entitled “Risk Factors - Risks Related to Our Intellectual Property and Information Technology” in this Annual Report on Form 10-K.
61
Governance
Our audit committee, which reports directly to the board of directors, is responsible for overseeing our cybersecurity risk management program.
The audit committee receives periodic updates on cybersecurity risks, mitigation strategies, and, in the event of a cybersecurity incident, incident response
strategies from our Chief Financial Officer. The audit committee updates the full board of directors on matters relating to cybersecurity risk management
and critical cybersecurity risks as appropriate.
Our Chief Technology Officer (“CTO”), who reports directly to our Vice President of Finance and, ultimately, our Chief Financial Officer, is
responsible for the day-to-day management of our cybersecurity risk management program. The individual currently serving in this position is a third-party
consultant who maintains 20 years of experience advising similarly situated companies on information technology and cybersecurity risk management.
Our CTO provides regular cybersecurity updates to our Vice President of Finance and Chief Financial Officer on matters relating to our cybersecurity
program and cybersecurity risk management.
ITEM 2. PROPERTIES
Our corporate headquarters are located in Yokneam, Israel, our U.S. headquarters are located in Marlborough,
Massachusetts and our European headquarters are located in Berlin, Germany.
We also have an office in Fremont, California where operations ceased as of December 31, 2024.
All of our facilities are leased, and we do not own any real property. The table below sets forth details of the square
footage of our current leased properties, all of which are utilized. We have no material tangible fixed assets apart from the
properties described below.
Square feet
(approximate)
Fremont, California
40,320
Marlborough, Massachusetts
11,850
Yokneam, Israel
11,500
Berlin, Germany
950
Total
64,620
We believe our facilities are adequate and suitable for our current needs.
ITEM 3. LEGAL PROCEEDINGS
Occasionally we are involved in various claims, lawsuits, regulatory examinations, investigations and other legal matters
arising, for the most part, in the ordinary course of business. The outcome of litigation and other legal matters is inherently
uncertain. In making a determination regarding accruals, using available information, we evaluate the likelihood of an
unfavorable outcome in legal or regulatory proceedings to which we are a party and records a loss contingency when it is
probable a liability has been incurred and the amount of the loss can be reasonably estimated.
Where we determine an unfavorable outcome is not probable or reasonably estimable, we do not accrue for any potential
litigation loss. These subjective determinations are based on the status of such legal or regulatory proceedings, the merits of our
defences and consultation with legal counsel. Actual outcomes of these legal and regulatory proceedings may materially differ
from our current estimates. It is possible that resolution of one or more of the legal matters currently pending or threatened could
result in losses material to our consolidated results of operations, liquidity, or financial condition.
For information regarding legal proceedings, see Note 8 “Commitments and Contingent Liabilities” in the notes to our
audited consolidated financial statements included in this annual report, which discussion we incorporate by reference into this
Item.
ITEM 4. MINE SAFETY DISCLOSURES.
Not applicable.
62
PART II
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND
ISSUER PURCHASES OF EQUITY SECURITIES
Market Information
Our ordinary shares began trading publicly on The Nasdaq Global Market on September 12, 2014, under the symbol
“RWLK” and were transferred for listing on The Nasdaq Capital Market effective May 25, 2017. In January 2024, the symbol for
our ordinary shares was changed to “LFWD”. As of March 6, 2025, we had approximately 32,492 shareholders of record.
Dividend Policy
We have never declared or paid any cash dividends on our ordinary shares. We do not anticipate paying any cash
dividends in the foreseeable future. We currently intend to retain future earnings, if any, to finance operations and expand our
business. Any future determination relating to our dividend policy will be made at the discretion of our board of directors and
will depend on a number of factors, including future earnings, capital requirements, financial condition and future prospects and
other factors our board of directors may deem relevant. The distribution of dividends may also be limited by Israeli law, which
permits the distribution of dividends only out of retained earnings or otherwise upon the permission of an Israeli court.
Israeli Taxes Applicable to U.S. Holders
A non-Israeli resident who derives capital gains from the sale of shares in an Israeli resident company that were purchased
after the company was listed for trading on a stock exchange outside of Israel will be exempt from Israeli tax so long as (amongst
other things) the shares were not held through a permanent establishment that the non-resident maintains in Israel. A partial
exemption may be available for non-Israeli resident shareholders who acquired their shares prior to the issuer’s initial public
offering.
However, non-Israeli corporations will not be entitled to the foregoing exemption if Israeli residents (i) have a controlling
interest of more than 25% in such non-Israeli corporation or (ii) are the beneficiaries of, or are entitled to, 25% or more of the
revenue or profits of such non-Israeli corporation, whether directly or indirectly. Such exemption is not applicable to a person
whose gains from selling or otherwise disposing of the shares are deemed to be a business income. Additionally, under the United
States-Israel Tax Treaty, or the treaty, the sale, exchange or other disposition of shares by a shareholder who (i) is a U.S. resident
(for purposes of the treaty), (ii) holds the shares as a capital asset, and (iii) is entitled to claim the benefits afforded to such person
by the treaty, is generally exempt from Israeli capital gains tax. Such exemption will not apply if: (i) the capital gain arising from
the sale, exchange or other disposition can be attributed to a permanent establishment in Israel; (ii) the shareholder holds, directly
or indirectly, shares representing 10% or more of the voting capital during any part of the 12-month period preceding the
disposition, subject to certain conditions; or (iii) such U.S. resident is an individual and was present in Israel for 183 days or more
during the relevant taxable year. In such case, the sale, exchange, or disposition of our ordinary shares should be subject to Israeli
tax, to the extent applicable; however, under the treaty, the taxpayer would be permitted to claim a credit for such taxes against
the U.S. federal income tax imposed with respect to such sale, exchange, or disposition, subject to the limitations under U.S. law
applicable to foreign tax credits. The treaty does not relate to U.S. state or local taxes.
In some instances where our shareholders may be liable for Israeli tax on the sale of their ordinary shares, the payment of
the consideration may be subject to the withholding of Israeli tax at source. If the above exemptions from capital gains tax are not
available, individuals will be subject to a 25% tax rate on real capital gains derived from the sale of shares as long as the
individual is not a substantial shareholder of the corporation issuing the shares (in which case the individual will be subject to a
30% tax rate), and corporations will be subject to a 23% corporate tax rate. A substantial shareholder is generally a person who
alone or together with such person’s relative or another person who collaborates with such person on a permanent basis, holds,
directly or indirectly, at least 10% of any of the means of control of the corporation, including the right to vote, receive profits,
nominate a director or an executive officer, receive assets upon liquidation, or order someone who holds any of the aforesaid
rights how to act, regardless of the source of such right. The determination of whether the individual is a substantial shareholder
will be made on the date on which the securities are sold. In addition, the individual will be deemed to be a substantial
shareholder if at any time during the 12 months preceding the date of the sale he or she was a substantial shareholder.
63
Dividends paid on publicly traded shares, like our ordinary shares, to non-Israeli residents are generally subject to Israeli
income tax at the rate of 25%, or 30% if the recipient of the dividend was a substantial shareholder at the time of distribution or at
any time during the prior 12-month period. Such dividends are generally subject to Israeli withholding tax at a rate of 25% if the
shares are registered with a nominee company (whether the recipient is a substantial shareholder or not), unless a different rate is
provided under an applicable tax treaty, provided that a certificate from the Israeli Tax Authority allowing for a reduced
withholding tax rate is obtained in advance. Under the United States-Israel Tax Treaty, the maximum rate of tax withheld at
source in Israel on dividends paid to a holder of our ordinary shares who is a U.S. resident (for purposes of the treaty) is 25%.
The treaty provides for reduced tax rates on dividends if (a) the shareholder is a U.S. corporation holding at least 10% of our
issued voting power during the part of the tax year that precedes the date of payment of the dividend and held such minimal
percentage during the whole of its prior tax year, and (b) not more than 25% of the Israeli company’s gross income consists of
interest or dividends, other than dividends or interest received from subsidiary corporations or corporations 50% or more of the
outstanding voting shares of which is owned by the Israeli company. The reduced treaty rate, if applicable, is 15% in the case of
dividends paid from income derived from a Beneficiary or Preferred Enterprise (which is entitled to corporate tax benefits) or
12.5% otherwise. We cannot assure you that in the event we declare a dividend we will designate the income out of which the
dividend is paid in a manner that will reduce shareholders’ tax liability. If the dividend is attributable partly to income derived
from a Beneficiary or Preferred Enterprise and partly to other sources of income, the withholding rate will be a blended rate
reflecting the relative portions of the two types of income. U.S. residents who are subject to Israeli withholding tax on a dividend
may be entitled to a credit or deduction for U.S. federal income tax purposes in the amount of the taxes withheld.
Individuals who are subject to tax in Israel are also subject to an additional tax at the rate of 5% on annual income
exceeding a certain threshold (NIS 721,560 for 2025, linked to the annual change in the Israeli Consumer Price Index), including,
but not limited to, income derived from dividends, interest, and capital gains.
Recent Sales of Unregistered Equity Securities
None.
Purchases of Equity Securities by the Issuer and Affiliated Purchasers
None.
ITEM 6. [RESERVED]
ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
The following discussion and analysis should be read in conjunction with our audited consolidated financial statements
and the related notes included elsewhere in this annual report. This discussion contains forward-looking statements that are
based on our management’s current expectations, estimates and projections for our business, which are subject to a number of
risks and uncertainties. Our actual results may differ materially from those anticipated in these forward-looking statements as a
result of many factors, including those set forth under “Special Note Regarding Forward-Looking Statements” and “Part I. Item
1A. Risk Factors.”
Overview
We are a medical device company that designs, develops, and commercializes life-changing solutions that span the
continuum of care in physical rehabilitation and recovery, delivering proven functional and health benefits in clinical settings as
well as in the home and community. Our initial product offerings were the ReWalk Personal and ReWalk Rehabilitation
Exoskeleton devices for individuals with spinal cord injury (“SCI Products”). These devices are robotic exoskeletons that are
designed for individuals with paraplegia that use our patented tilt-sensor technology and an onboard computer and motion
sensors to drive motorized legs that power movement. These SCI Products allow individuals with spinal cord injury (“SCI”) the
ability to stand and walk again during everyday activities at home or in the community. In March 2023, we received clearance of
our premarket notification (“510(k)”) from the U.S. Food and Drug Administration (“FDA”) for the ReWalk Personal
Exoskeleton with stair and curb functionality, which adds usage on stairs and curbs to the indication for use for the device in the
U.S. The clearance permits U.S. customers to participate in more walking activities in real-world environments in their daily lives
where stairs or curbs may have previously limited them when using the exoskeleton for its intended, FDA-indicated uses. This
feature has been available in Europe since initial CE Clearance, and real-world data from a cohort of 47 European users
throughout a period of over seven years consisting of over 18,000 stair steps was collected to demonstrate the safety and efficacy
of this feature and support the FDA submission. In June 2024, we submitted to the FDA a 510(k) premarket notification for
ReWalk 7 Personal Exoskeleton device, a next-generation ReWalk model, and such 510(k) is pending FDA review.
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We have sought to expand our product offerings beyond the SCI Products through internal development, distribution
agreements, and acquisitions. We have developed our ReStore Exo-Suit device, which we began commercializing in June 2019
(we ceased sales in the EU in May 2024). The ReStore is a powered, lightweight soft exo-suit intended for use during the
rehabilitation of individuals with lower limb disabilities due to stroke. In the second quarter of 2020, we finalized and moved to
implement two separate agreements to distribute additional product lines in the United States, one of which we later discontinued.
We are the exclusive distributor of the MYOLYN MyoCycle FES Pro cycles to U.S. rehabilitation clinics and for the MyoCycle
Home cycles available to U.S. veterans through the Veterans Health Administration (“VHA”) hospitals.
In August 2023, we made our first acquisition to supplement our internal growth when we acquired AlterG, a leading
provider of Anti-Gravity systems for use in physical and neurological rehabilitation. We paid a cash purchase price of
approximately $19 million at closing and additional cash earnout payments may be paid based upon a percentage of AlterG’s
revenue growth over the two years following the closing. The AlterG Anti-Gravity systems use patented, National Aeronautics
and Space Administration (“NASA”) derived differential air pressure (“DAP”) technology to reduce the effects of gravity and
allow patients to rehabilitate with finely calibrated support and reduced pain. AlterG Anti-Gravity systems are utilized in over
4,000 facilities globally in more than 40 countries. We will continue to evaluate other products for distribution or acquisition that
can broaden our product offerings further to help individuals with neurological injury and disability.
In March 2025, we announced an agreement to increase our penetration of SCI Products into the workers’ compensation
market in which CorLife, LLC., a Delaware limited liability company (“CorLife”) and a division of Numotion, the nation’s
leading and largest provider of products and services that provide mobility, health and personal independence. Pursuant to the
agreement, CorLife became the exclusive distributor for the ReWalk Personal Exoskeleton for individuals with workers’
compensation claims. The agreement leverages CorLife’s extensive network of credentialed providers and experts to include the
ReWalk Personal Exoskeleton among the services and equipment they provide to thousands of injured workers each year. Under
the agreement, the CorLife reimbursement team manages all workers’ compensation claims submissions for the ReWalk Personal
Exoskeleton. We believe this agreement will build awareness of the benefits of the ReWalk Personal Exoskeleton among
individuals with workers’ compensation coverage and gain us access to the resources of CorLife to facilitate efficient processing
of claims.
We are in the research stage of ReBoot, a personal soft exo-suit for home and community use by individuals post-stroke,
and we are currently evaluating the reimbursement landscape and the potential clinical impact of this device. This product would
be a complementary product to ReStore as it provides active assistance to the ankle during plantar flexion and dorsiflexion for
gait and mobility improvement in the home environment, and it received Breakthrough Device Designation from the FDA in
November 2021. Further investment in the development path of the ReBoot was paused in 2023 pending determination regarding
the clinical and commercial opportunity of this device and at this time it remains on hold.
Our principal markets are primarily in the United States and Europe with some lesser sales in Asia, the Middle East and
South America. We sell our products primarily directly in the United States, through a combination of direct sales and distributors
(depending on the product line) in Germany and Canada, and primarily through distributors in other markets. In markets where
we sell direct to consumers, we have established relationships with clinics and rehabilitation centers, professional and college
sports teams, and individuals and organizations in the SCI community, and in markets where we do not sell direct to consumers,
our distributors maintain these relationships. We have primary offices in Yokneam, Israel, Marlborough, Massachusetts, and
Berlin, Germany. We also had offices in Fremont, California and Queens, New York where we ceased operations as of December
31, 2024.
We have in the past generated and expect to generate in the future revenue from a combination of clinics and
rehabilitation centers, commercial distributors, third-party payors (including private and government payors), professional and
college sports teams, and self-pay individuals. While a broad uniform policy of coverage and reimbursement by third-party
commercial payors currently does not exist in the United States for exoskeleton technologies such as the ReWalk Personal
Exoskeleton, we are pursuing various paths of reimbursement and support fundraising efforts by institutions and clinics, such as
the VHA policy that was issued in December 2015 for the evaluation, training, and procurement of ReWalk Personal Exoskeleton
systems for all qualifying veterans living with SCI across the United States.
We have also been pursuing updates with the CMS to clarify the Medicare coverage category (i.e., benefit category)
applicable for personal exoskeletons. In 2022, the National Spinal Cord Injury Statistical Center (“NSCISC”), which maintains
the world’s largest database on spinal cord injury research, reported that CMS is the primary payor for approximately 57% of the
SCI population which are at least five years post their injury date, with Medicare representing a majority of this percentage. In
July 2020, following a successful submission and hearing process, a code was issued for ReWalk Personal Exoskeleton, which
may be used for purposes of claim submission to Medicare, Medicaid, and other payors.
65
On November 1, 2023, CMS released the Calendar Year 2024 Home Health Prospective Payment System Final Rule,
CMS-1780-F (“Final Rule”), which was adopted through the notice and comment rulemaking process. The Final Rule includes a
policy confirming that personal exoskeletons are included in the Medicare brace benefit category, as of January 1, 2024.
Medicare personal exoskeleton claims with dates of service on or after January 1, 2024 that are billed using HCPCS code K1007
are assigned to the brace benefit category. CMS reimburses items classified under the brace benefit category using a lump sum
payment methodology.
On April 11, 2024, CMS revised its April 2024 Durable Medical Equipment, Prosthetics, Orthotics, and Supplies
(“DMEPOS”) Fee Schedule to include a final lump-sum Medicare purchase fee schedule amount for personal exoskeletons
(HCPCS code K1007) with an established rate of $91,032. The final payment determination was made by CMS by applying a
“gap filling” process, which was used in light of CMS determining that the code describing the technology has no fee schedule
pricing history and that lower extremity exoskeletons incorporate “revolutionary features” that cannot be described by or
considered comparable to any other existing code or combination of codes. As part of gap-filling, CMS utilizes verifiable
supplier or commercial pricing information and adjusts this pricing information according to a deflation and update factor
methodology. In applying this formula to the K1007 code describing the ReWalk Personal Exoskeleton, CMS says that it
calculated this final payment amount by averaging pricing information for exoskeleton devices from Lifeward and other
manufacturers.
In Germany, we continue to make progress toward achieving coverage from the various government, private and worker’s
compensation payors for our SCI products. In September 2017, each of German insurer BARMER GEK (“BARMER”) and
national social accident insurance provider Deutsche Gesetzliche Unfallversicherung (“DGUV”) indicated that they will provide
coverage to users who meet certain inclusion and exclusion criteria. In February 2018, the head office of German Statutory
Health Insurance (“SHI”) Spitzenverband (“GKV”) confirmed its decision to list the ReWalk Personal Exoskeleton system in the
German Medical Device Directory. This decision means that ReWalk is listed among all medical devices for compensation,
which SHI providers can procure for any approved beneficiary on a case-by-case basis. During the year 2020 and 2021, we
announced several new agreements with German SHIs, including TK and DAK Gesundheit, as well as the first German Private
Health Insurer (“PHI”), which outline the process of obtaining our devices for eligible insured patients. In February 2025, we
finalized an agreement with BARMER to formalize the reimbursement process for the provision of ReWalk exoskeletons to
medically eligible beneficiaries. We are also currently working with several additional SHIs on securing a formal operating
contract that will establish the process of obtaining a ReWalk Personal Exoskeleton for their beneficiaries within their system.
Additionally, to date, several private insurers in the United States and Europe are providing reimbursement for ReWalk in certain
cases.
Components of Our Statements of Operations
Revenue
We currently rely, and in the future will rely, on sales of our ReWalk Personal Exoskeletons, AlterG Anti-Gravity systems,
MyoCycle FES cycles, and related consumables, services, and extended warranties for our revenue. Our revenue is derived from
a combination of third-party payors, including private and government employers, institutions, and self-payors. Payments for our
products by third party payors have been made primarily through case-by-case determinations. Third-party payors include,
without limitation, private insurance plans, workers’ compensation programs, managed care organizations, and government
programs including the VHA and Medicare. We expect that third-party payors will be an increasingly important source of
revenue in the future as we increase the volume of sales of ReWalk Personal systems to Medicare-eligible beneficiaries following
establishment of a benefit category and pricing. In December 2015, the VHA issued a national policy for the evaluation, training,
and procurement of ReWalk Personal Exoskeleton systems for all qualifying veterans across the United States. The VHA policy
is the first national coverage policy in the United States for qualifying individuals who have suffered spinal cord injury.
ReWalk Personal and ReWalk Rehabilitation Exoskeleton systems are generally covered by a five-year warranty from the
date of purchase, which is included in the purchase price. ReWalk systems sold to Medicare beneficiaries carry a two-year
warranty, consistent with the coverage decision by CMS. The warranty covers all elements of the systems (except the batteries,
which carry a one-year warranty), other than repairs for normal wear and tear. The AlterG Anti-Gravity systems are sold with a
one-year factory warranty covering parts and services in the U.S. and a two-year factory warranty covering parts only in the rest
of the world. The ReStore device is sold with a two-year warranty.
66
Cost of Revenue and Gross Profit
For ReWalk and ReStore, cost of revenue consists primarily of complete systems purchased from our outsourced
manufacturer, Sanmina. For these products, cost of revenue also includes internal costs such as salaries and related personnel
costs including non-cash share-based compensation, functions that support manufacturing and inventory management, training
and inspection, service activities, freight costs, and reserves for warranty and inventory condition. The cost of revenue also
includes royalties and expenses related to royalty-bearing research and development grants.
For our AlterG systems, which we manufactured at our facility in Fremont, California until December 31,2024, cost of
revenue consists primarily of raw materials, direct labor, indirect labor, and other factory overhead costs such as rent and
utilities. In addition, cost of revenue also includes field service costs, shipping expenses and reserves for warranty and inventory
condition.
For certain products that we distributed, such as the MyoCycle and Meditouch product lines, cost of revenue consists
primarily of complete systems purchased from the manufacturers. In addition, the cost of revenue also includes field service costs
and shipping expenses.
Our gross profit and gross margin (defined as gross profit as a percentage of revenue) are influenced by a number of
factors, including the volume and price of our products sold, fluctuations in the mix of products sold, and variability in our cost
of revenue. We expect gross profit and gross margin will expand in the future as we increase our revenue volumes and realize
operating efficiencies associated with greater scale which will reduce the cost of revenue as a percentage of revenue.
Operating Expenses
Research and Development Expenses, Net
Research and development expenses, net consist primarily of salaries and related personnel costs including share-based
compensation, supplies, materials, and consulting expenses associated with to product design and development, clinical studies,
regulatory submissions, patent costs, sponsored research and other related activities. We expense all research and development
expenses as they are incurred.
Research and development expenses are presented net of the amount of any grants we receive for research and
development in the period in which we receive the grant. We previously received grants and other funding from the IIA. Certain
of those grants require us to pay royalties on sales of certain systems, which are recorded as cost of revenue. We may receive
additional funding from these entities or others in the future. See “Grants and Other Funding” below.
Sales and Marketing Expenses
Our sales and marketing expenses consist primarily of salaries and related personnel costs including share-based
compensation for sales, sales support, marketing, and reimbursement related activities, travel, marketing, advertisement,
tradeshows and conferences, lobbying, and public relations activities.
67
General and Administrative Expenses
Our general and administrative expenses consist primarily of salaries and related personnel costs including share-based
compensation for our administrative, finance, and general management personnel, professional services, and insurance.
Financial Expenses (Income), Net
Financial income and expenses consist of bank commissions, foreign exchange gains and losses, interest earned on
investments in short term deposits and royalty income.
Interest income consists of interest earned on our cash and cash equivalent balances. Interest expense consists of interest
accrued on, and certain other costs with respect to any indebtedness. Foreign currency exchange changes reflect gains or losses
related to transactions denominated in currencies other than the U.S. dollar.
Taxes on Income
As of December 31, 2024, we had not yet generated taxable income in Israel. As of that date, our net operating loss
carryforwards for Israeli tax purposes amounted to approximately $256.5 million.
Since the acquisition of AlterG, Lifeward Inc. and AlterG have been filing a consolidated tax return in the U.S. Together,
they have federal net operating loss (“NOL”) carryforwards totaling $48.7 million and state NOL carryforwards of $30.9 million,
which are set to begin expiring in 2025 and 2028, respectively.
Our taxable income generated outside of Israel will be subject to the regular corporate tax rate in the applicable
jurisdictions. As a result, our effective tax rate will be a function of the relative proportion of our taxable income that is generated
in those locations compared to our overall net income.
Grants and Other Funding
Israel Innovation Authority (formerly known as the Office of the Chief Scientist)
From our inception through December 31, 2024, we have received a total of $2.8 million in funding from the IIA, $1.6
million of which are royalty-bearing grants, $400 thousand were received in consideration for an investment in our preferred
shares while $806 thousand was received without future obligation. Of the royalty-bearing grants received, we have paid
royalties to the IIA in the total amount of $114 thousand. The agreements with IIA require us to pay royalties at a rate of 3% on
sales of certain systems and related services up to the total amount of funding received for the development of these systems,
linked to the dollar, and bearing interest at an annual rate of SOFRPR applicable to dollar deposits. If we transfer IIA-supported
technology or know-how outside of Israel, we will be liable for additional payments to IIA depending upon the value of the
transferred technology or know-how, the amount of IIA support, the time of completion of the IIA-supported research project and
other factors. As of December 31, 2024, the aggregate contingent liability to the IIA was $1.6 million. For more information, see
“Part I, Item 1A. Risk Factors-We have received Israeli government grants for certain of our research and development activities
and we may receive additional grants in the future. The terms of those grants restrict our ability to manufacture products or
transfer technologies outside of Israel and we may be required to pay penalties in such cases or upon the sale of our company.”
68
Results of Operations
Year Ended December 31, 2024 Compared to Year Ended December 31, 2023
Revenue
Our revenue for 2024 and 2023 were as follows (dollars in thousands, except unit amounts):
Years Ended December 31,
2024
2023
Revenue
$
25,663 $
13,854
Revenue consist of transactions for our portfolio of ReWalk, AlterG, ReStore and MyoCycle systems.
Revenue was $25.7 million, an increase of $11.8 million, or 85%, during 2024 as compared to 2023. Of this increase, $7.9
million was attributable to the full year impact of the AlterG business. The remaining increase of $3.9 million was primarily from
higher revenue from ReWalk Personal Exoskeletons in the U.S. due to Medicare coverage.
In the future, we expect our growth to be primarily driven by sales of our ReWalk Personal device through expansion of
coverage and reimbursement by commercial and government third-party payors, more shipments of our AlterG Anti-Gravity
system through greater penetration of rehabilitation clinics in the U.S. and internationally, and more placements of the MyoCycle
device with rehabilitation clinics and personal users.
Gross Profit
Our gross profit for 2024 and 2023 were as follows (in thousands):
Years Ended December 31,
2024
2023
Gross profit
$
8,216 $
4,453
Gross profit was $8.2 million, or 32% of revenue, for 2024, as compared to a gross profit of $4.5 million, or 32% of
revenue for 2023. This increase was a result of higher sales volume from ReWalk Personal Exoskeletons due to CMS coverage in
the U.S., along with a full year of revenue from AlterG, both contributing to the overall growth in gross profit.
We expect gross profit and gross margin will increase in the future as we increase our revenue volumes and realize
operating efficiencies associated with greater scale which will reduce the cost of revenue as a percentage of revenue. Gross
margin is also expected to increase in the future as a result of the transition of the production of the AlterG systems from our
factory in Fremont, California, where we discontinued operations as of December 31, 2024, to a contract manufacturer.
Research and Development Expense, Net
Our research and development expense, net for 2024 and 2023 was as follows (in thousands):
Years Ended December 31,
2024
2023
Research and development expense, net
$
4,625 $
4,148
Research and development expense was $4.6 million in 2024, an increase of $0.5 million, or 11.5%, during 2024 as
compared to 2023. The increase is attributable to the full year impact of the AlterG business and included investments in new
product development projects.
We intend to focus the rest of our research and development expenses mainly on our current product support, as well as to
advance the FDA review of the submission for clearance of the ReWalk 7 next-generation exoskeleton model. We also have
ongoing product development activity to reduce the material costs for our ReWalk and AlterG product lines.
69
Sales and Marketing Expense
Our sales and marketing expense for 2024 and 2023 was as follows (in thousands):
Years Ended December 31,
2024
2023
Sales and marketing expense
$
17,949 $
13,922
Sales and marketing expense was $17.9 million in 2024, an increase of $4.0 million, or 28.9%, during 2024 as compared
to 2023. The increase was primarily due to higher personnel-related expenses from increased headcount following the AlterG
acquisition and additional spending on promotional activities.
In the near term our sales and marketing expense are expected to be driven by our efforts to facilitate growth in the sales
of our commercial product lines, expand the reimbursement coverage of our ReWalk Personal Exoskeleton device, and support
the training activities of ReWalk customers.
General and Administrative Expense
Our general and administrative expense for 2024 and 2023 was as follows (in thousands):
Years Ended December 31,
2024
2023
General and administrative
$
5,195 $
9,995
General and administrative expense was $5.2 million, a decrease of $4.8 million, or 48.0%, during 2024 as compared to
2023. The decrease was mainly driven by remeasurement of earn out liability of $2.6 million and decrease in M&A related
expenses to the AlterG acquisition in 2023.
Impairment charges
Years Ended December 31,
2024
2023
Impairment charges
$
9,794 $
-
During the year ended December 31, 2024, we recorded an impairment charge of $9.8 million primarily related to certain
acquired intangible assets, due to lower-than-expected financial performance
Financial income, net
Our financial income, net for 2024 and 2023 was as follows (in thousands):
Years Ended December 31,
2024
2023
Financial income, net
$
448 $
1,467
Financial income, net, reflects a decrease in financial income of $1.0 million during 2024 as compared to 2023. The
decrease in financial income was primarily due to lower yielding interest earning accounts, a decline in interest income, and
unfavourable exchange rate fluctuations.
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Income Tax
Our income tax for 2024 and 2023 was as follows (in thousands):
Years Ended December 31,
2024
2023
Taxes on income (benefit)
$
43 $
(12)
Income tax increased by $55 thousand during 2024 as compared to 2023, mainly due to our subsidiary’s activity in
Germany.
Year Ended December 31, 2023 Compared to Year Ended December 31, 2022
A discussion of changes in our results of operations in 2023 compared to 2022 has been omitted from this annual report on
Form 10-K but may be found in “Part I. Item 7. Management’s Discussion and Analysis of Financial Condition and Results of
Operations” of our Form 10-K for the fiscal year ended December 31, 2023, filed with the SEC on February 27, 2024, as
amended on April 29, 2024, which is available free of charge on the SEC’s website at www.sec.gov and at golifeward.com, and is
incorporated by reference herein.
Critical Accounting Policies
Our consolidated financial statements are prepared in accordance with United States generally accepted accounting
principles. The preparation of our financial statements requires us to make estimates, judgments and assumptions that can affect
the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements
and the reported amounts of revenue and expenses during the reporting period. We base our estimates, judgments and
assumptions on historical experience and other factors that we believe to be reasonable under the circumstances. Materially
different results can occur as circumstances change and additional information becomes known. Besides the estimates identified
above that are considered critical, we make many other accounting estimates in preparing our financial statements and related
disclosures. See Note 2 to our consolidated financial statements presented elsewhere in this annual report for a description of the
significant accounting policies that we used to prepare our consolidated financial statements. The critical accounting policies that
were impacted by the estimates, judgments and assumptions used in the preparation of our consolidated financial statements are
discussed below.
Revenue Recognition
Our revenue is recognized in accordance with ASC Topic 606 when obligations under the terms of a contract with our
customer are satisfied; generally, this occurs with the transfer of control of our products or services. Revenue is measured as the
amount of consideration to which we expect to be entitled in exchange for transferring products or providing services. To achieve
this core principle, we apply the following five steps:
1. identify the contract with a customer;
2. identify the performance obligations in the contract;
3. determine the transaction price;
4. allocate the transaction price to performance obligations in the contract; and
5. recognize revenue when or as we satisfy a performance obligation.
Provisions are made at the time of revenue recognition for any applicable warranty cost expected to be incurred. The
timing for revenue recognition among the various products and customers is dependent upon satisfaction of such criteria and
generally varies from either shipment or delivery to the customer depending on the specific shipping terms of a given transaction,
as stipulated in the agreement with each customer. Other than pricing terms which may differ due to the different volumes of
purchases between distributors and end-users, there are no material differences in the terms and arrangements involving direct
and indirect customers. Our products sold through agreements with distributors are non-exchangeable, non-refundable, non-
returnable and without any rights of price protection or stock rotation. Accordingly, we consider all the distributors as end-users.
We generally do not grant a right of return for our products except in rare circumstances, and in those cases we record reductions
to revenue for expected future product returns based on our historical experience and estimates.
71
For the majority of sales of ReWalk Rehabilitation Exoskeleton systems, we include insignificant training and consider
the elements in the arrangement to be a single performance obligation. Therefore, the Company recognizes revenue for the
system only when control is transferred after delivery and when the training has been completed, in accordance with the
agreement terms with the customer, once all other revenue recognition criteria have been met. For sales of ReWalk Personal
Exoskeleton systems to end users, and for sales of ReWalk Personal Exoskeleton or ReWalk Rehabilitation Exoskeleton systems
to third party distributors, we do not provide training to the end user as this training is completed by the rehabilitation centers or
by the distributor that have previously completed the ReWalk Training program.
Warranties are classified as either assurance type or service type warranty. A warranty is considered an assurance type
warranty if it provides the consumer with assurance that the product will function as intended for a limited period of time.
SCI Products typically include a five-year warranty except for certain payors in which it is a two-year warranty. For the
five-year warranty, the first two years are considered as an assurance type warranty and the additional three-year period is
considered an extended service arrangement, which is a service type warranty. A service type warranty is either sold with a unit
or separately for a unit for which the warranty has expired. A service type warranty is accounted as a separate performance
obligation and revenue is recognized ratably over the life of the warranty.
With the recent establishment of a Medicare reimbursement pathway for the ReWalk product, the Company includes
variable consideration when, in the Company’s judgment, it is probable that a significant future reversal of cumulative revenue
under the contract will not occur. The Company reassesses variable consideration at each reporting period and, if necessary, these
estimates are adjusted to reflect the anticipated amounts to be collected when those facts and circumstances become known.
The ReStore device is sold with a two-year warranty which is considered as assurance type warranty.
The AlterG Anti-Gravity systems are sold with a one-year assurance type warranty for parts and labor in the US and with
a two-year assurance type warranty for parts for distributors. We also sell extended warranties for AlterG Anti-Gravity systems
for the periods after the expiration of the original warranty. These are accounted for as separate performance obligations from the
AlterG Anti-Gravity system.
We rent our AlterG Anti-Gravity systems to customers for a fixed monthly fee over the rental term, which typically
ranges from 2 to 3 years. Rental revenues accounted for under ASC Topic 842 and are recorded as earned on a monthly basis. We
also offer for the SCI Products a rent-to-purchase model in which we recognize revenue ratably according to the agreed rental
monthly fee for a limited period prior to selling its products. For units placed, we transfer control and recognize a sale when title
has passed to our customer and rental revenue ratably according to the agreed rental monthly fee. Each unit placed is considered
an independent, unbundled performance obligation.
Income Taxes
As part of the process of preparing our consolidated financial statements, we are required to estimate our taxes in each of
the jurisdictions in which we operate. We account for income taxes in accordance with ASC Topic 740, “Income Taxes,” or ASC
Topic 740. ASC Topic 740 prescribes the use of an asset and liability method whereby deferred tax asset and liability account
balances are determined based on the difference between book value and the tax bases of assets and liabilities and carryforward
tax losses. Deferred taxes are measured using the enacted tax rates and laws that are expected to be in effect when the differences
are expected to reverse. We exercise judgment and provide a valuation allowance, if necessary, to reduce deferred tax assets to
their estimated realizable value if it is more likely than not that some portion or all of the deferred tax asset will not be realized.
We have established a full valuation allowance with respect to our deferred tax assets.
ASC 740, “Balance Sheet Classification of Deferred Taxes” provides presentation requirements to classify deferred tax
assets and liabilities, along with any related valuation allowance, are classified as non-current on the balance sheet. We account
for uncertain tax positions in accordance with ASC 740 and recognize the tax benefit from an uncertain tax position only if it is
more likely than not that the tax position will be sustained on examination by the taxing authorities, based on the technical merits
of the position. The tax benefits recognized in the financial statements from such a position should be measured based on the
largest benefit that has a greater than 50% likelihood of being realized upon ultimate settlement. Accordingly, we report a liability
for unrecognized tax benefits resulting from uncertain tax positions taken or expected to be taken in a tax return. We recognize
interest and penalties, if any, related to unrecognized tax benefits in tax expense.
72
Recently Issued and Adopted Accounting Pronouncements
A discussion of recent accounting pronouncements is included in Note 2y, New Accounting Pronouncements, to our
consolidated financial statements included elsewhere in this annual report.
Liquidity and Capital Resources
Sources of Liquidity and Outlook
Since inception, we have funded our operations primarily through the sale of our equity securities and convertible notes to
investors in private placements, the sale of our equity securities in public offerings, cash exercises of outstanding warrants and
the incurrence of bank debt.
As of December 31, 2024, the Company had cash and cash equivalents of $6.7 million. The Company has an accumulated
deficit in the total amount of $264.8 million as of December 31, 2024 and further losses are anticipated in the development of its
business. Those factors raise substantial doubt about the Company’s ability to continue as a going concern. The ability to
continue as a going concern is dependent upon the Company obtaining the necessary financing to meet its obligations and repay
its liabilities arising from normal business operations when they come due.
The Company intends to finance operating costs over the next twelve months with existing cash on hand, potential
reduction in operating cash burn and future issuances of equity and debt securities, or through a combination of the foregoing.
However, we will also need to seek additional sources of financing if we require more funds than anticipated during the next 12
months or in later periods.
The accompanying consolidated financial statements have been prepared assuming the Company will continue as a going
concern, which contemplates the realization of assets and liabilities and commitments in the normal course of business. The
consolidated financial statements for the year ended December 31, 2024 do not include any adjustments to reflect the possible
future effects on the recoverability and classification of assets or the amounts and classification of liabilities that may result from
uncertainty related to the Company’s ability to continue as a going concern.
We expect to incur future net losses and our transition to profitability is dependent upon, among other things, the
successful development and commercialization of our products and product candidates, the establishment of contracts for the
distribution of new product lines, or the acquisition of additional product lines, any of which, or in combination, would contribute
to the achievement of a level of revenue adequate to support our cost structure. Until we achieve profitability or generate positive
cash flows, we will continue to need to raise additional cash from time to time.
We intend to fund future operations through cash on hand, additional private and/or public offerings of debt or equity
securities, cash exercises of outstanding warrants or a combination of the foregoing. In addition, we may seek additional capital
through arrangements with strategic partners or from other sources and we will continue to address our cost structure.
Notwithstanding, there can be no assurance that we will be able to raise additional funds or achieve or sustain profitability or
positive cash flows from operations.
Our anticipated primary uses of cash are funding (i) sales, marketing, and promotion activities related to market
development for our ReWalk Personal Exoskeleton device and AlterG Anti-Gravity system, broadening third-party payor and
CMS coverage for our ReWalk Personal Exoskeleton device and commercializing our new product lines added through
distribution agreements; (ii) development of future generation designs for our ReWalk device, new AlterG products utilizing
DAP technology, and our lightweight exo-suit technology for potential home personal health utilization for multiple indications;
(iii) routine product updates; (iv) potential acquisitions of businesses, such as our recent acquisition of AlterG, and (v) general
corporate purposes, including working capital needs. Our future cash requirements will depend on many factors, including our
rate of revenue growth, the expansion of our sales and marketing activities, the timing and extent of our spending on research and
development efforts, the attractiveness of potential acquisition candidates and international expansion. If our current estimates of
revenue, expenses or capital or liquidity requirements change or are inaccurate, we may seek to sell additional equity or debt
securities, arrange for additional bank debt financing, or refinance our indebtedness. There can be no assurance that we will be
able to raise such funds on acceptable terms. For more information, see “Part I, Item 1A. Risk Factors-We have concluded that
there is substantial doubt as to our ability to continue as a going concern.”
73
Equity Raises
Use of Form S-3
Beginning with the filing of our Form 10-K on February 17, 2017, we were subject to limitations under the applicable
rules of Form S-3, which constrained our ability to secure capital with respect to public offerings pursuant to our effective Form
S-3. These rules limit the size of primary securities offerings conducted by issuers with a public float of less than $75 million to
no more than one-third of their public float in any 12-month period. At the time of filing this annual report, we were subject to
these limitations because our public float did not reach at least $75 million in the 60 days preceding the filing of this annual
report. We will continue to be subject to these limitations for the remainder of the 2025 fiscal year and until the earlier of such
time as our public float reaches at least $75 million or when we file our next annual report for the year ended December 31, 2025,
at which time we will be required to re-test our status under these rules. If our public float is below $75 million as of the filing of
our next annual report on Form 10-K, or at the time we file a new Form S-3, we will continue to be subject to these limitations,
until the date that our public float again reaches $75 million. These limitations do not apply to secondary offerings for the resale
of our ordinary shares or other securities by selling shareholders or to the issuance of ordinary shares upon conversion by holders
of convertible securities, such as warrants. We have registered up to $100 million of ordinary shares warrants and/or debt
securities and certain other outstanding securities with registration rights on our registration statement on Form S-3, which was
declared effective by the SEC in May 2022.
Equity Offerings and Warrant Exercises
On January 7, 2025, we entered into a purchase agreement with certain institutional investors for the issuance and sale of
1,818,183 ordinary shares and ordinary warrants to purchase up to an aggregate of 1,818,183 ordinary shares at an exercise price
of $2.75 per share. Each ordinary share was sold at an offering price of $2.75. The offering of the ordinary shares and the
ordinary shares that are issuable from time to time upon exercise of the pre-funded warrants was made pursuant to our shelf
registration statement on Form S-3 initially filed with the SEC on March 30, 2022, and declared effective by the SEC on May 16,
2022, and the ordinary warrants were issued in a concurrent private placement. The ordinary warrants are exercisable at any time
and from time to time, in whole or in part, following the date of issuance and ending three years from the date of issuance. The
offering closed on January 8, 2025. Additionally, we issued warrants to purchase up to 109,091 ordinary shares, with an exercise
price of $3.4375 per share, exercisable at any time and from time to time, in whole or in part, following the date of issuance and
ending three years from the date of issuance, to certain representatives of H.C. Wainwright as compensation for its role as the
placement agent in January 2025 private placement offering.
Share Repurchase Program
On June 2, 2022, our board of directors approved a share repurchase program to repurchase up to $8.0 million of our
ordinary shares. On July 21, 2022, we received approval from an Israeli court for the share repurchase program. The program was
scheduled to expire on the earlier of January 20, 2023, or reaching $8.0 million of repurchases. On December 22, 2022, our board
of directors approved an extension of the repurchase program, with such extension to be in the aggregate amount of up to $5.8
million. The extension was approved by an Israeli court on February 9, 2023, and it expired on August 9, 2023.
As of December 31, 2024, pursuant to the share repurchase program, we had repurchased a total of 574,658 of our
outstanding ordinary shares at a total cost of $3.5 million.
74
Cash Flows
Years Ended December 31,
2024
2023
2022
Net cash used in operating activities
$
(21,718) $
(20,667) $
(17,891)
Net cash used in investing activities
-
(18,149)
(25)
Net cash used in financing activities
-
(992)
(2,500)
Effect of Exchange rate changes on Cash, Cash Equivalents and Restricted Cash
34
45
(79)
Net cash flow
$
(21,684) $
(39,763) $
(20,495)
Year Ended December 31, 2024 to Year Ended December 31, 2023
Net Cash Used in Operating Activities
Net cash used in operating activities was $21.7 million in 2024, an increase of $1.1 million as compared to 2023 mainly
due to higher investment in working capital items, including trade receivables and inventory reflecting the timing of collections,
payments and inventory management, partially offset by higher revenues in relation to cash expenses.
Net Cash Used in Investing Activities
Net cash used in investing activities decreased by $18.1 million in 2024 as compared to 2023, primarily due to the
acquisition of AlterG.
Net Cash Used in Financing Activities
Net cash used in financing activities decreased by $0.9 million in 2024 as compared to 2023, mainly due to the repurchase
of our ordinary shares under our share repurchase program, which expired on August 9, 2023.
Year Ended December 31, 2023 Compared to Year Ended December 31, 2022
A discussion of changes in our cash flows in 2023 compared to 2022 has been omitted from this annual report on Form
10-K but may be found in “Part I. Item 7. Management’s Discussion and Analysis of Financial Condition and Results of
Operations” of our Form 10-K for the fiscal year ended December 31, 2023, filed with the SEC on February 27, 2024, as
amended on April 29, 2024, which is available free of charge on the SECs website at www.sec.gov and at golifeward.com, and is
incorporated by reference herein.
75
Obligations and Commercial Commitments
Set forth below is a summary of our contractual obligations as of December 31, 2024:
Payments due by period (in dollars, in
thousands)
Contractual obligations
Total
Less than
1 year
1-3 years
Purchase obligations (1)
$
7,257 $
7,257 $
-
Collaboration Agreement and License Agreement obligations (2)
35
35
-
Operating lease obligations (3)
919
894
25
Earnout liability (4)
608
608
-
Total
$
8,819 $
8,794 $
25
(1)
We depend on one contract manufacturer, Sanmina Corporation, for both the SCI products and the ReStore Products, and one contract
manufacturer, Cirtronics Corporation, for the AlterG Anti-Gravity systems. We place our manufacturing orders with each of Sanmina and
Cirtronics pursuant to purchase orders or by providing forecasts for future requirements. Purchase orders are executed with suppliers based on our
sales forecast.
(2)
Under the Collaboration Agreement, we were required to pay in quarterly installments the funding of our joint research collaboration with
Harvard, subject to a minimum funding commitment under applicable circumstances. Our License Agreement with Harvard consists of patent
reimbursement expenses payments and a license upfront fee payment. There are also several milestone payments contingent upon the achievement
of certain product development and commercialization milestones and royalty payments on net sales from certain patents licensed to Harvard. All
product development milestones contemplated by the License Agreement have been met as of December 31, 2024; however, there are still
outstanding commercialization milestones under the License Agreement that depend on us reaching certain sales amounts, some or all of which
may not occur. Our Collaboration Agreement with Harvard was concluded on March 31, 2022.
(3)
Our operating leases consist of leases for our facilities in the United States, Israel and Germany and motor vehicles in Israel.
(4)
Earnout payments based on AlterG’s revenue growth during the two consecutive trailing twelve-month periods following closing of the
acquisition.
We calculated the payments due under our operating lease obligation for our Israeli office that are to be paid in NIS at a
rate of exchange of NIS 3.647:$1.00, which was the applicable exchange rate as of December 31, 2024.
Off-Balance Sheet Arrangements
We had no off-balance sheet arrangements or guarantees of third-party obligations during the periods presented.
Trend Information
For information on significant known trends, please see “Part I-Item 1. Business – Overview” in this annual report.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Currency Exchange Risk
Our results of operations and cash flows are affected by fluctuations in foreign currency exchange rates. Since 2015, most
of our expenses were denominated in U.S. dollars and the remaining expenses were denominated in NIS and euro, until 2018
most of our revenue was denominated in U.S. dollars and the remainder of our revenue was denominated in euro and British
pound whereas in the last four years our euro revenue is higher than our U.S dollar revenue. Accordingly, changes in the value of
the NIS and Euro relative to the U.S. dollar in each of the years 2024, 2023, and 2022 impacted amounts recorded on our
consolidated statements of operations for these periods. We expect that the denominations of our revenue and expenses in 2025
will be consistent with what we experienced in 2024.
The following table presents information about the devaluation in the exchange rates of the NIS and euro against the U.S.
dollar in 2024, 2023 and 2022:
Change in Average Exchange
Rate
Period
NIS against
the
U.S. Dollar
(%)
Euro against
the
U.S. Dollar
(%)
2024
(0.25)
0.06
2023
(9.00)
2.67
2022
3.70
10.84
The figures above represent the change in the average exchange rate in the given period compared to the average
exchange rate in the immediately preceding period. Negative figures represent the appreciation of the U.S. dollar compared to the
NIS or the euro. A 10% increase or decrease in the value of the NIS against the U.S. dollar would have decreased or increased
our net loss by approximately $498 thousand in 2024. A 10% increase or decrease in the value of the euro against the U.S. dollar
would have decreased or increased our net loss by approximately $73 thousand in 2024.
76
Other Market Risks
We do not believe that we have material exposure to interest rate risks or to inflationary risks.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The information required hereunder is set forth under Report of Independent Registered Public Accounting Firm,
Consolidated Balance Sheets, Consolidated Statements of Operations, Statements of Changes in Shareholders’ Equity,
Consolidated Statements of Cash Flows and Notes to Consolidated Financial Statements included in the Consolidated Financial
Statements that are a part of this annual report. Other financial information is included in the Consolidated Financial Statements
that are a part of this annual report.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
DISCLOSURE
None.
ITEM 9A. CONTROLS AND PROCEDURES
Disclosure Controls and Procedures
We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in
our Exchange Act reports is recorded, processed, summarized, and reported within the time periods specified in the SEC’s rules
and forms, and that such information is accumulated and communicated to our management, including our Chief Executive
Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required financial disclosure.
As of the end of the period covered by this annual report, we carried out an evaluation, under the supervision and with the
participation of our management, including our Chief Executive Officer and Chief Financial Officer, of the effectiveness of the
design and operation of our disclosure controls and procedures (as defined in Rule 13a-15(e) and Rule 15d-15(e) of the Exchange
Act). Based upon, and as of the date of, this evaluation, the Chief Executive Officer and the Chief Financial Officer concluded
that our disclosure controls and procedures were effective such that the information required to be disclosed by us in our SEC
reports is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms, and is
accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as
appropriate to allow timely decisions regarding required disclosure.
Management’s Report on Internal Control over Financial Reporting
Our management is responsible for establishing and maintaining adequate internal control over financial reporting, as
defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act. Our internal control over financial reporting is a process
designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial
statements for external purposes in accordance with U.S. GAAP.
Our internal control over financial reporting includes those policies and procedures that:
●
pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of our assets;
●
provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with
U.S. GAAP, and that our receipts and expenditures are being made only in accordance with authorizations of our management and
directors; and
●
provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of our assets that
could have a material effect on our financial statements.
Management has assessed the effectiveness of our internal control over financial reporting as of December 31, 2024. In
making its assessment, management used the criteria described in Internal Control — Integrated Framework (2013) issued by the
Committee of Sponsoring Organizations of the Treadway Commission.
Based on management’s assessment, management has concluded that our internal control over financial reporting was
effective as of December 31, 2024 to provide reasonable assurance regarding the reliability of financial reporting and the
preparation of consolidated financial statements for external reporting purposes in accordance with U.S. GAAP.
77
This annual report does not include an attestation report of our independent registered public accounting firm regarding
internal controls over financial reporting because we are exempt from this requirement as a smaller reporting company and non-
accelerated filer.
Changes in Internal Control over Financial Reporting
During the fourth quarter of the fiscal year ended December 31, 2024, there were no changes in our internal control over
financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) of the Exchange Act) that materially affected, or that are
reasonably likely to materially affect, our internal control over financial reporting.
ITEM 9B. OTHER INFORMATION
Rule 10b5-1 Trading Arrangements
During the quarter ended December 31, 2024, none of our directors or officers (as defined in Rule 16a-1(f) under the
Exchange Act) adopted or terminated a “Rule 10b5-1 trading arrangement” or “non-Rule 10b5-1 trading arrangement” (as each
term is defined in Item 408(a) of Regulation S-K).
ITEM 9C. DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS
Not applicable
78
PART III
ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
Information About Our Directors
The following table sets forth the names and ages of the directors of the Company as of March 6, 2025 and their principal
occupations at present and for the past five years. Our Board of Directors (the “Board”) currently consists of seven members and
is divided into three classes. One class is elected each year at the annual meeting of stockholders for a term of three years. The
term of the Class II directors expires at the 2025 Annual Meeting of Shareholders. No family relationships exist between any
directors or executive officers, as such term is defined in Item 401 of Regulation S-K promulgated under the Exchange Act.
Name
Age
Current Position with the Company
Director
Since
Joseph Turk* (2)
57
Class I Director, Chairman
2022
Hadar Levy* (3)
52
Class I Director
2022
Larry Jasinski
67
Class II Director, Chief Executive Officer
2012
Dr. John William Poduska* (2)(3)
87
Class II Director
2014
Randel E. Richner* (1)(2)
69
Class II Director
2020
Michael Swinford*(1)
56
Class III Director
2024
Robert Marshall*(3)
58
Class III Director
2024
* Independent
(1) Member of Nominating and Corporate Governance Committee.
(2) Member of Compensation Committee.
(3) Member of Audit Committee.
79
Class II Directors Continuing in Office Until the 2025 Annual General Meeting of Shareholders
Set forth below is a list of our directors continuing in office until the 2025 annual general meeting of shareholders,
together with certain biographical information, including their ages as of the date of this annual report:
Larry Jasinski, 67, has served as our Chief Executive Officer (“CEO”) and as a member of our Board since February
2012. From 2005 until 2012, Mr. Jasinski served as the President and Chief Executive Officer of Soteira, Inc., a company
engaged in development and commercialization of products used to treat individuals with vertebral compression fractures, which
was acquired by Globus Medical in 2012. From 2001 to 2005, Mr. Jasinski was President and Chief Executive Officer of Cortek,
Inc., a company that developed next-generation treatments for degenerative disc disease, which was acquired by Alphatec in
2005. From 1985 until 2001, Mr. Jasinski served in multiple sales, research and development, and general management roles at
Boston Scientific Corporation. Mr. Jasinski has served on the board of directors of Massachusetts Bay Lines since 2015 and of
LeMaitre Vascular, Inc. since 2003. Mr. Jasinski holds a B.Sc. in marketing from Providence College and an MBA from the
University of Bridgeport. We believe that Mr. Jasinski’s successful leadership and executive experience, along with his extensive
knowledge of the medical devices industry and research and development, provide him the qualifications and skills to act as a
member of our Board.
Dr. John William Poduska, 87, has served on our Board since 2014. He also serves as a director on the boards of a number
of privately-held companies. Dr. Poduska also served as a director of EXA Corporation (Nasdaq: EXA), where he served as
chairman of the company and a member of the nominating and corporate governance committee, until 2018, Novell, Inc. until
2011 and of Anadarko Petroleum Corporation and Safeguard Scientifics, Inc. until 2009. Dr. Poduska was the Chairman of
Advanced Visual Systems Inc., a provider of visualization software, from January 1992 to December 2001. From December 1989
until December 1991, Dr. Poduska was President and Chief Executive Officer of Stardent Computer Inc., a computer
manufacturer. From December 1985 until December 1989, Dr. Poduska served as Chairman and Chief Executive Officer of
Stellar Computer Inc., a computer manufacturer he founded which is the predecessor of Stardent Computer Inc. Prior to founding
Stellar Computer, Inc., Dr. Poduska founded Apollo Computer Inc. and Prime Computer, Inc. Dr. Poduska holds a Sc.D. from
MIT and an Honorary Doctorate of Humane Letters from Lowell University. We believe that Dr. Poduska’s varied director
experience, both in private and public companies, his expertise in computer engineering and his familiarity with developing
companies equip him with the qualifications and skills to serve as a member of our Board.
Randel E. Richner, 69, has served on our Board since November 2020. Ms. Richner has over 30 years’ experience in
health policy, reimbursement and economics. From 2013 to 2015, Ms. Richner served as Executive Vice President of Intralign
Health, LLC. From 2006 to 2012, she was President and Founder of Neocure Group, data analytics, health economics and
reimbursement strategic services, acquired by Intralign Health, LLC in 2013. From 1997 to 2006, Ms. Richner was Vice
President of Global Government Affairs and Reimbursement, Boston Scientific Corporation. Ms. Richner has engaged with U.S.
Congress and CMS, appointed as first industry representative, Executive Committee (EC) Medicare Coverage Advisory
Committee (MCAC). She has served on the Executive Dean’s Advisory Board, University of Michigan’s School of Public
Health, since 2007, and has served on multiple boards including MassMedic (founding Women in MedTech), Executive Advisory
Board Center for Evaluation Value, Risk Tufts New England Medical Center, International Society of Pharmacoeconomics and
Research (ISPOR), founding the U.S. Medical Device Council. Ms. Richner has been an invited executive lecturer at Dartmouth,
Tuck School of Business; University of Michigan School of Engineering and University of Michigan School of Public
Health. She has a Master of Public Health in Health Policy and Administration and a Bachelor of Science in Nursing from
University of Michigan. We believe that Ms. Richner’s extensive leadership and board membership experience in the healthcare
industry, as well as her familiarity with health economics and reimbursement procedures, provides her with a unique perspective
of our market and the qualifications and skills to serve as a member of our Board.
Class III Director Continuing in Office until the 2026 Annual General Meeting of Shareholders
Set forth below is our director continuing in office until the 2026 annual general meeting of shareholders, together with
certain biographical information, including his age as of the date of this annual report:
Michael Swinford, 56, has served on our Board since April 2024. Mr. Swinford has been Chief Executive Officer of
Numotion since July 2014, where he has grown the company to become the largest provider of mobility and independence
solutions in the United States – serving over 400,000 individuals annually with Spinal Cord Injuries, Traumatic Brain Injuries,
ALS, Muscular Dystrophy, Cerebral Palsy, Multiple Sclerosis, Spinal Muscular Atrophy, Amputees and many other mobility
related disabilities. As CEO at Numotion, Mr. Swinford has expanded commercial coverage with over 5000 health plans, rehab
hospitals, specialty and multi-disciplinary clinics, skilled nursing facilities, primary care, and home health providers.
Mr. Swinford has led efforts for benefit coverage determination for Power Wheelchair Seat Elevation systems in 2023 and is
actively leading efforts for Power Standing Wheelchairs and reform of Service and Repair regulations and reimbursement levels.
Prior to Numotion, Mr. Swinford had a highly successful 22-year career at GE Healthcare, including serving as the President and
CEO of GE Healthcare Services and as an officer of General Electric Company. Mr. Swinford held various operational and
commercial roles throughout his career leading through various business cycles from start-ups to turnarounds. Mr. Swinford also
serves as a director of CareATC, a technology enabled population health primary care provider, as well as a director of Aspen
Surgical, a global surgical supply manufacturer. We believe that Mr. Swinford’s extensive experience with health and
rehabilitation products, as well as his knowledge of the reimbursement process, provide him the qualifications and skills to serve
as a member of our Board.
80
Robert Marshall, 58, has served on our Board since November 2024. Mr. Marshall has served as the Chief Financial
Officer and Treasurer of Lantheus Holdings, Inc. (“Lantheus”), a public radiopharmaceutical company, since September 2018.
Prior to joining Lantheus, Mr. Marshall spent 16 years with Zimmer Biomet Holdings, Inc. (“Zimmer Biomet”), a public global
medical device company with a leading position in musculoskeletal health, in which he held various senior leadership roles,
including Vice President, Investor Relations and Corporate Treasurer, and most recently Vice President, Americas Finance, for
the U.S., Canadian and Latin American commercial markets. Before Zimmer Biomet, Mr. Marshall was employed with Brown &
Williamson Tobacco, a subsidiary of British American Tobacco, p.l.c., in Louisville, Kentucky, where he held several positions of
increasing responsibility. Mr. Marshall holds a Master of Business Administration from Indiana University, South Bend, and a
Bachelor of Business Administration in Finance from the University of Notre Dame. He also holds the CFA designation. We
believe that Mr. Marshall’s extensive financial leadership experience provide him the qualifications and skills to serve as a
member of our Board.
Class I Directors Continuing in Office Until the 2027 Annual General Meeting of Shareholders
Set forth below is a list of our directors continuing in office until the 2024 annual general meeting of shareholders,
together with certain biographical information, including their ages as of the date of this annual report:
Joseph Turk, 57, has served on our Board since April 2022 and has served as our Chairman since September 2024. Mr.
Turk has served as an Executive Vice President of Fresenius Medical Care North America since 2019, during which he has
served as the Global Head of Home Therapies since January 2022, President of its North American Renal Therapies Group from
July 2021 through December 2021, and as the President of its U.S. Home and Critical Care Therapies group from February 2019
until July 2021. Previously he served in a number of roles at NxStage Medical, Inc. from 2000 to 2019, including President,
Senior Vice President, and Vice President of Marketing. Prior to this, Mr. Turk held roles at Boston Scientific Corporation and
McKinsey and Company. Mr. Turk holds a B.A. from Wabash College and an M.A from the Kellogg Graduate School of
Management. We believe that Mr. Turk’s management leadership and experience in successfully achieving favorable Medicare
reimbursement, building an organization for implementation of commercialization with a novel breakthrough medical device, and
completing multiple new business development transactions provide him the qualifications and skills to serve as a member of our
Board.
Hadar Levy, 52, has served on our Board since August 2022. Mr. Levy has more than 20 years of experience in
management and finance. Mr. Levy has served as the Chief Executive Officer of Brainsway Ltd., a commercial stage medical
device company developing advanced noninvasive neurostimulation treatments for mental health disorders, since February 2023,
and prior to that, held several senior management roles at Brainsway since joining in July 2014, including as Senior Vice
President and Chief Operating Officer since May 2020, and as Chief Financial Officer from September 2014 to May 2020. Prior
to joining Brainsway, Mr. Levy served as a finance manager in the Latin America Division at Amdocs Ltd., where he was
responsible for accounting, financial reporting, treasury, portfolio management and finance support for Mergers & Acquisitions.
Prior to Amdocs, he served as Chief Financial Officer & Business Development of Notal Vision, a healthcare company that
researches and develops medical technologies for detecting retinal malfunction and deterioration, where he was responsible for
all financial functions and led financial rounds of equity including M&A activities with strategic partners. Prior to this position,
he served as Controller of GE Healthcare Israel. Mr. Levy began his career at Deloitte LLP. He holds a BA in Accounting and
Economics, an LLM degree from Bar-Ilan University (Tel Aviv, Israel), and is a Certified Public Accountant. We believe that Mr.
Levy’s finance and senior management experience in the medical device industry experience provide him with the qualifications
and skills to serve as a member of our Board.
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Information About Our Executive Officers
The following table sets forth the name, age and position of each of our executive officers as of March 6, 2025:
Name
Age
Position
Larry Jasinski
67
Chief Executive Officer and Director
Michael Lawless
57
Chief Financial Officer
Charles Remsberg
63
Chief Sales Officer
Jeannine Lynch
60
Vice President of Market Access
Almog Adar
41
Vice President of Finance and Chief Accounting Officer
Larry Jasinski has served as our Chief Executive Officer and as a member of our board since February 2012. From 2005
until 2012, Mr. Jasinski served as the President and Chief Executive Officer of Soteira, Inc., a company engaged in development
and commercialization of products used to treat individuals with vertebral compression fractures, which was acquired by Globus
Medical in 2012. From 2001 to 2005, Mr. Jasinski was President and Chief Executive Officer of Cortek, Inc., a company that
developed next-generation treatments for degenerative disc disease, which was acquired by Alphatec in 2005. From 1985 until
2001, Mr. Jasinski served in multiple sales, research and development, and general management roles at Boston Scientific
Corporation. Mr. Jasinski has served on the board of directors of Massachusetts Bay Lines since 2015 and of LeMaitre Vascular,
Inc. since 2003. Mr. Jasinski holds a B.Sc. in marketing from Providence College and an MBA from the University of
Bridgeport.
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Michael Lawless has served as our Chief Financial Officer since September 2022. Prior to Lifeward, Mr. Lawless served
as a CFO consultant for Danforth Advisors, LLC, a provider of financial consulting services to the life sciences industry. From
2015 to 2020, Mr. Lawless held several financial leadership positions including Division CFO at Azenta, Inc. (formerly Brooks
Automation, Inc.), a worldwide provider of management solutions for biological samples. Previously, Mr. Lawless also held
financial leadership roles for AECOM Technology, Inc., PerkinElmer, Inc., Momenta Pharmaceuticals, Inc. and CTI Molecular
Imaging, Inc. Mr. Lawless has a Bachelor of Arts degree in Economics from Swarthmore College, a Master of Business
Administration degree from the Tuck School of Business at Dartmouth College and is a Certified Public Accountant.
Charles Remsberg has served as our Chief Sales Officer since August 2023. Prior to Lifeward, Mr. Remsberg served as
CEO of AlterG from March 2017 until our acquisition of AlterG in August 2023. An industry veteran of over 30 years, Mr.
Remsberg has been responsible for bringing innovative rehabilitation technology to physical therapy, neuro-rehabilitation, sports
medicine, and wellness customers. Prior to serving at AlterG, Mr. Remsberg served in both executive and commercial leadership
roles for Tibion (for which he served as the CEO from December 2009 to April 2013, when it was acquired by AlterG), Hocoma
(for which he served as the U.S. CEO and Global Head of Sales from September 2003 to November 2009), and Biodex Medical
Systems (for which he served as the Head of Worldwide Sales from January 1997 to October 2002). Mr. Remsberg holds an AS
in Business Administration from Suffolk County Community College.
Jeannine Lynch has served as our Vice President of Market Access and Strategy since August 2021. Prior to Lifeward,
Ms. Lynch served as Senior Director of Patient Access Services at BioMarin Pharmaceuticals from April 2009 to September
2021. In addition to her work with BioMarin, Ms. Lynch has worked for industry leaders such as Genentech and Pfizer/Agouron.
She has held leadership roles in commercial management, product launches and built customized patient services to address
several different rare and ultrarare medical conditions. Ms. Lynch also served on the Board of Directors for MVP, a non-profit
organization to help young people of color prepare, perform, progress, and prosper in their education, leadership and early
professional careers. Ms. Lynch is a graduate of the University of California Berkeley and holds a Master of Public Health from
the University of Michigan.
Almog Adar has served as our Vice President of Finance since December 2022 and as our Chief Accounting Officer since
March 2022. From 2020 to December 2022, Mr. Adar served as our Director of Finance and Corporate Financial Controller. Prior
to Lifeward, Mr. Adar served as Controller of Infinya Recycling Ltd. (previously Amnir Recycling) from January 2018 until
December 2019. From January 2016 until December 2017, Mr. Adar served as Assistant Controller of Delta Galil Industries. Mr.
Adar has a Bachelor of Arts degree in Accounting and Economics from the Open University of Israel and is a Certified Public
Accountant licensed by the Israeli Ministry of Justice.
Board Leadership Structure
Although the Board does not currently have a formal policy requiring the offices of Chairman of the Board and CEO to be
separate, the Israel Companies Law provides that one individual cannot serve as both Chairman and CEO, unless the shareholders
approve such dual role, with each such approval to be valid for not more than three years. Currently, we have separated the
positions of CEO and Chairman of the Board in recognition of the differences between the two roles. The CEO is responsible for
the day-to-day leadership and performance of the Company, while the Chairman of the Board (in collaboration with other
members of the Board) sets the strategic direction of the Company, provides guidance to the management, sets the agenda for the
Board meetings (in collaboration with the other members of the Board) and presides over meetings of the Board. We believe that
the current separation between Chairman and CEO allows each of them to better focus on their designated responsibilities. In
addition, we believe that the current separation provides a more effective monitoring and objective evaluation of the performance
of the CEO. The Board believes it is important that the Company retain organizational flexibility to determine whether the roles
of CEO and Chairman of the Board should be separated or combined.
Risk Management
The Board is actively involved in the oversight and management of risks that could affect the Company. This oversight
and management is conducted primarily through committees of the Board, as disclosed in the descriptions of each of the
committees above and in the charters of each of the committees, but the full Board has retained responsibility for general
oversight of risks. The Board regularly receives reports from members of senior management on areas of material risk to the
Company, including operational (which itself includes cybersecurity matters), financial, regulatory and legal. The audit
committee oversees management of financial risks (including liquidity and credit), approves all transactions with related persons
and is primarily responsible for oversight of the Company’s financial reporting process and internal control over financial
reporting. The compensation committee is responsible for overseeing the management of risks relating to the Company’s
executive compensation plans and arrangements. The nominating and corporate governance committee oversees the Company’s
corporate governance programs, including the administration of the Code of Business Conduct and Ethics. The Board discharges
its oversight responsibility through full reports by each committee chair regarding the relevant committee’s actions, as well as
through regular reports directly from officers responsible for oversight of particular risks within the Company.
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Opt-Out of Certain Israel Companies Law Requirements
As an Israeli company, we are required to comply with the requirements of the Israel Companies Law and the regulations
promulgated thereunder. Until early 2018, our Board was required to include at least two “external directors” as defined under the
Israel Companies Law. In addition, we were required to comply with certain requirements under the Israel Companies Law
regarding the composition of our audit committee and compensation committee, including requirements relating to the inclusion
and role of the external directors on such committees. Pursuant to regulations then promulgated under the Israel Companies Law,
however, we — as a company that does not have a controlling shareholder, and that complies with the U.S. securities laws and
the corporate governance rules of the Nasdaq Stock Market (“Nasdaq”) — were permitted to “opt out” of the requirement to
appoint external directors as well as the above requirements related to the composition of the audit committee and the
compensation committee.
In February 2018, our Board determined that opting out of the requirements under the Israel Companies Law regarding
the appointment of external directors and the composition of our audit committee and compensation committee would reduce our
administrative and financial burden and provide greater flexibility in attracting highly-qualified directors, while maintaining
appropriate corporate governance standards. Accordingly, we opted out of such requirements. As a result, our Board is no longer
required to include two external directors, and our audit committee and compensation committee do not need to comply with
certain committee composition requirements under the Israel Companies Law.
Director Independence
Our Board has determined that, other than Larry Jasinski, our CEO, all of our current directors, and each former director
who served as a member of the Board during the last fiscal year, are independent under Nasdaq listing standards. Furthermore,
our Board also determined that all current members of the audit committee, compensation committee, and nominating and
corporate governance committee are independent under the applicable Nasdaq listing standards and rules and regulations of the
SEC. In making its determinations regarding independence, the Board carefully reviewed the categorical tests enumerated in the
Nasdaq independence definition, as well as the individual circumstances of each director with regard to each director’s business
and personal activities as they may relate to the Company and our management.
Nasdaq Listing Standards
The Nasdaq definition of “independent director” includes a series of objective tests. Specifically, a director is deemed
independent under the Nasdaq rules if such director is not an executive officer or employee of the Company or any other
individual having a relationship which, in the opinion of the company’s Board, would interfere with the exercise of independent
judgment in carrying out the responsibilities of a director. Generally, the following persons are not considered independent,
among others:
•
a director who is, or at any time during the past three years was, employed by the company;
•
a director who accepted or who has a family member who accepted any compensation from the company in excess of $120,000 during any
period of twelve consecutive months within the three years preceding the determination of independence, other than compensation for board or
board committee service, compensation paid to a family member who is an employee (other than an executive officer) of the company, or
benefits under a tax-qualified retirement plan, or non-discretionary compensation;
•
a director who is a family member of an individual who is, or at any time during the past three years was, employed by the company as an
executive officer;
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•
a director who is, or has a family member who is, a partner in, or a controlling shareholder or an executive officer of, any organization to which
the company made, or from which the company received, payments for property or services in the current or any of the past three fiscal years
that exceed 5% of the recipient’s consolidated gross revenues for that year, or $200,000, whichever is more, other than the following: (i)
payments arising solely from investments in the company’s securities; or (ii) payments under non-discretionary charitable contribution matching
programs;
•
a director who is, or has a family member who is, employed as an executive officer of another entity where at any time during the past three
years any of the executive officers of the company serve on the compensation committee of such other entity; and
•
a director who is, or has a family member who is, a current partner of the company’s outside auditor, or was a partner or employee of the
company’s outside auditor who worked on the company’s audit at any time during any of the past three years.
Audit Committee
We have a separately designated standing audit committee. The audit committee currently consists of Mr. Robert
Marshall, Dr. John William Poduska and Mr. Hadar Levy. Mr. Marshall serves as the chairman of the audit committee. The audit
committee holds a minimum of four meetings per year and will meet more frequently as circumstances require. The audit
committee met five times during the fiscal year ended December 31, 2024.
Israel Companies Law Requirements
Under the Israel Companies Law, we are required to appoint an audit committee. As discussed above under “Opt-Out of
Certain Israel Companies Law Requirements,” in February 2018 we opted out of certain additional Israel Companies Law
requirements relating to the audit committee, including certain requirements as to the composition of our audit committee.
Nasdaq Listing Standards and SEC Requirements
Under the Nasdaq corporate governance rules, we are required to maintain an audit committee consisting of at least three
independent directors, each of whom is financially literate and one of whom has accounting or related financial management
expertise. Additionally, we must state whether any members of the audit committee qualifies as an “audit committee financial
expert” under Item 407(d) of Regulation S-K as promulgated by the SEC.
All members of the audit committee meet the requirements for financial literacy under the applicable rules and regulations
of the SEC and the Nasdaq corporate governance rules. Our Board has determined that each of Robert Marshall and Hadar Levy
is an “audit committee financial expert” as defined by the SEC rules and has the requisite financial sophistication as defined by
the Nasdaq corporate governance rules.
Each of the current audit committee members is “independent” as such term is defined under the Nasdaq corporate
governance rules and under Rule 10A-3(b)(1) under the Exchange Act, which is different from the general test for independence
of board members and members of other committees.
Audit Committee Role
Our Board has adopted an audit committee charter that sets forth the responsibilities of the audit committee consistent
with the rules of the SEC and the Nasdaq corporate governance rules, as well as the requirements for such committee under the
Israel Companies Law, including the following:
•
overseeing our independent registered public accounting firm and recommending the engagement, compensation or termination of engagement
of our independent registered public accounting firm to the Board in accordance with Israeli law;
•
reviewing regularly the senior members of the independent auditor’s team, including the lead audit partner and reviewing partner;
•
pre-approving the terms of audit, audit-related and permitted non-audit services provided by the independent registered public accounting firm;
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•
recommending the engagement or termination of the person filling the office of our internal auditor;
•
reviewing periodically with management, the internal auditor and the independent registered public accounting firm the adequacy and
effectiveness of the Company’s internal control over financial reporting; and
•
reviewing with management and the independent registered public accounting firm the annual and quarterly financial statements of the Company
prior to filing with the SEC.
The charter of the audit committee is available at https://ir.golifeward.com/corporate-governance/charters-and-policies.
Information contained on, or that can be accessed through, our website does not constitute a part of this annual report and is not
incorporated by reference herein.
The audit committee provides assistance to our Board in fulfilling its legal and fiduciary obligations in matters involving
our accounting, auditing, financial reporting, internal control over financial reporting and legal compliance. Specifically, the audit
committee pre-approves the services performed by our independent registered public accounting firm and reviews the firm’s
reports regarding our accounting practices and systems of internal control over financial reporting. The audit committee also
oversees the audit efforts of our independent registered public accounting firm and takes those actions that it deems necessary to
satisfy itself that such accountants are in fact independent of management.
Under the Israel Companies Law, the audit committee is responsible for:
•
determining whether there are deficiencies in the business management practices of the Company and making recommendations to our Board to
improve such practices;
•
determining whether to approve certain related party transactions, and classifying transactions in which a controlling shareholder has a personal
benefit or other interest as significant or insignificant (which affects the required approvals) (see “—Approval of Related Party Transactions
under Israeli Law” below);
•
examining our internal controls and internal auditor’s performance, including whether the internal auditor has sufficient resources and tools to
dispose of its responsibilities, and in certain cases approving the annual work plan of our internal auditor;
•
examining the scope of our auditor’s work and compensation and submitting a recommendation with respect thereto to our Board or
shareholders, depending on which of them is considering the appointment of our auditor; and
•
establishing procedures for the handling of employees’ complaints as to the deficiencies in the management of our business and the protection to
be provided to such employees.
The audit committee may not approve any actions requiring its approval unless at the time of the approval a majority of
the committee’s members are present. See “—Approval of Related Party Transactions under Israeli Law” below.
Compensation Committee
We have a separately designated standing compensation committee. The compensation committee currently consists of
Ms. Randel E. Richner, Mr. Joseph Turk, and Dr. John William Poduska. Dr. Poduska serves as the chairman of the compensation
committee. The compensation committee meets as circumstances require and held five meetings during the year ended December
31, 2024.
Israel Companies Law Requirements
Under the Israel Companies Law, the board of directors of a public company must appoint a compensation committee. As
discussed above under “Opt-Out of Certain Israel Companies Law Requirements,” in February 2018 we opted out of certain
additional Israel Companies Law requirements relating to the compensation committee, including certain requirements as to the
composition of our compensation committee.
The duties of the compensation committee include the recommendation to the company’s board of directors of a
compensation policy regarding the terms of engagement of directors and of specified members of senior management. That
compensation policy must be adopted by the company’s board of directors, after considering the recommendations of the
compensation committee, and must then be approved by the company’s shareholders, which approval requires a Special Approval
for Compensation (as defined below under “—Approval of Related Party Transactions under Israeli Law— Disclosure of
Personal Benefits or Other Interests of an Office Holder and Approval of Certain Transactions”). Our Board adopted a
compensation policy, which our shareholders approved at the annual general meeting of our shareholders held on September 13,
2024 (the “Compensation Policy”).
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The compensation policy of an Israeli company must serve as the basis for decisions concerning the financial terms of
employment or engagement of office holders, including compensation, benefits, exculpation, insurance and indemnification. The
compensation policy must take into account certain factors, including advancement of the company’s objectives, the company’s
business plan and its long-term strategy, and creation of appropriate incentives. It must also consider, among other things, the
company’s risk management, size and the nature of its operations. The compensation policy must include certain principles, such
as: a link between variable compensation and long-term performance and measurable criteria; the relationship between variable
and fixed compensation; and the minimum holding or vesting period for variable, equity-based compensation. We believe that the
Compensation Policy satisfies these requirements.
The compensation committee is responsible for (a) recommending the Compensation Policy to our Board for its approval
(and subsequent approval by our shareholders) and (b) carrying out duties related to the Compensation Policy and to the
compensation of our directors and senior management, including:
•
reviewing and making recommendations regarding our Compensation Policy at least every three years;
•
recommending to the Board periodic updates to the Compensation Policy;
•
assessing implementation of the Compensation Policy;
•
approving compensation terms of executive officers, directors and employees affiliated with controlling shareholders; and
•
exempting certain compensation arrangements from the requirement to obtain shareholder approval under the Israel Companies Law.
Nasdaq Listing Standards and Section 16 of the Exchange Act
Under the Nasdaq corporate governance rules, we are required to maintain a compensation committee consisting of at
least two independent directors. Each of the members of the compensation committee is required to be independent under the
Nasdaq listing standards relating to compensation committee members, which are different from the general test for
independence of the Board and members of other committees. In assessing independence, the Board considered all factors
specifically relevant to determining whether a director has a relationship to the Company which is material to that director’s
ability to be independent from management in connection with the duties of a compensation committee member and determined
that each of the members of the compensation committee satisfies those requirements. Additionally, transactions between us and
our directors and executive officers will be considered exempt from short-swing liability under Section 16(b) of the Exchange
Act if approved by our Board or a committee composed solely of two or more “non-employee directors,” as defined in Rule 16b-
3 under the Exchange Act (“Rule 16b-3”). Our Board has determined that each of the members of the compensation committee is
a “non-employee director,” as defined in Rule 16b-3.
Compensation Committee Role
Our Board has adopted a compensation committee charter setting forth the responsibilities of the committee, which
include:
•
reviewing and approving the granting of options and other incentive awards under the Company’s equity compensation plans to the extent such
authority is delegated by our Board;
•
recommending the Company’s compensation policy and reviewing that policy from time to time both with respect to the CEO and other office
holders and generally, including to assess the need for periodic updates;
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•
reviewing and approving corporate goals relevant to the compensation of the CEO and other officers and evaluating the performance of the CEO
and other officers; and
•
reviewing, evaluating and making recommendations regarding the compensation and benefits for our non-employee directors.
The charter of the compensation committee is available at https://ir.golifeward.com/corporate-governance/charters-and-
policies. Information contained on, or that can be accessed through, our website does not constitute a part of this annual report
and is not incorporated by reference herein.
Subject to applicable law, the compensation committee may delegate its authority to subcommittees established from time
to time by the committee. Such subcommittees shall consist of one or more members of the committee or the board and shall
report to the committee. The compensation committee is authorized to retain and terminate compensation consultants, legal
counsel or other advisors to the committee and to approve the engagement of any such consultant, counsel or advisor, to the
extent it deems necessary or appropriate after specifically analyzing the independence of any such consultant retained by the
compensation committee.
Compensation Consultant
The compensation committee has authority to retain compensation consulting firms to assist it in the evaluation of
executive officer and employee compensation and benefit programs. The compensation committee has retained Aon Hewitt
(“Aon”) as its independent compensation advisor. Aon provides an objective perspective as to the reasonableness of our
executive compensation programs and practices and their effectiveness in supporting our business and compensation objectives,
as well as our equity compensation plans and number of shares available for grants.
Although Aon regularly consults with management in performing work requested by the compensation committee, it did
not perform any separate additional services for management. The compensation committee has assessed the independence of
Aon pursuant to applicable SEC rules and concluded that no conflict of interest exists that would prevent Aon from
independently representing the compensation committee.
Nominating and Corporate Governance Committee
The nominating and corporate governance committee currently consists of Ms. Randel E. Richner and Mr. Michael
Swinford. Ms. Richner serves as the chairman of the nominating and corporate governance committee. The nominating and
corporate governance committee meets as circumstances require, with two meetings having taken place during the fiscal year
ended December 31, 2024. Our Board has adopted a nominating and corporate governance committee charter that sets forth the
responsibilities of the nominating and corporate governance committee, which include:
•
overseeing and assisting our Board in reviewing and recommending nominees for election as directors;
•
reviewing and evaluating recommendations regarding management succession;
•
assessing the performance of the members of our Board; and
•
establishing and maintaining effective corporate governance policies and practices, including, but not limited to, developing and recommending
to our Board a code of conduct.
The nominating and corporate governance committee considers proposals from a number of sources, including
recommendations for nominees from shareholders submitted upon written notice to the chairman of the nominating and corporate
governance committee, c/o Lifeward Ltd., 200 Donald Lynch Blvd, Marlborough, MA 01752. Other sources include referrals
from other directors, members of management and the Company’s advisors. When considering a person to be recommended for
nomination as a director, the nomination and governance committee evaluates, whether sourced by a shareholder or otherwise,
among other factors, experience, accomplishments, education, skills, personal and professional integrity, diversity of the Board
and the candidate’s ability to devote the necessary time for service as a director (including directorships and other positions held
at other corporations and organizations). The nominating and governance committee does not use different standards to evaluate
nominees depending on whether they are proposed by our directors and management or by our shareholders.
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The nominating and corporate governance committee has no specific policy on director diversity. However, the Board
reviews diversity of viewpoints, background, experience, accomplishments, education and skills when evaluating nominees. The
Board believes that such diversity is important because it provides varied perspectives and promotes active and constructive
discussion among directors and between the Board and management, resulting in more effective oversight of management’s
formulation and implementation of strategic initiatives. In addition, in the Board’s executive sessions and in annual performance
evaluations conducted by the Board and its committees, the Board from time to time considers whether the Board’s composition
promotes a constructive and collegial environment. In determining whether an incumbent director should stand for reelection, the
nominating and corporate governance committee considers the above factors, as well as that director’s personal and professional
integrity, attendance, preparedness, participation and candor and other relevant factors as determined by the Board. Additionally,
under Israeli law, if at the time of election of a director, all of the members of the Board are of the same gender, the director to be
elected must be of the other gender. The charter of the nominating and corporate governance committee is available
at https://ir.golifeward.com/corporate-governance/charters-and-policies. Information contained on, or that can be accessed
through, our website does not constitute a part of this annual report and is not incorporated by reference herein.
Delinquent Section 16(a) Reports
Section 16(a) of the Exchange Act requires that the Company’s directors, executive officers and persons who own more
than 10% of our outstanding ordinary shares file with the SEC initial reports of ownership in our ordinary shares and reports of
changes in ownership in our ordinary shares. Based solely on a review of reports filed during the fiscal year ended December 31,
2024 and certain of our internal records, we believe that all Section 16(a) filing requirements applicable to our directors, officers
and greater than 10% beneficial owners were satisfied on a timely basis, except for one Form 4 filed late by Michael Swinford on
November 25, 2024, such report relating to one transaction not reported in the time period specified by the rule.
Code of Ethics
We have adopted a Code of Conduct and Ethics (the “Code of Ethics”), which applies to all officers, directors and
employees. The Code of Ethics is available on our website at https://ir.golifeward.com/corporate-governance/charters-and-
policies. Any amendments to the Code of Ethics, or any waivers of its requirements, are expected to be disclosed on our website
to the extent required by applicable rules and exchange requirements, including in order to satisfy Item 5.05 of Form 8-K. The
reference to our website address here and elsewhere in this proxy statement does not constitute incorporation by reference of the
information contained at or available through our website.
Policy Prohibiting Insider Trading and Related Procedure
We have adopted insider trading policies and procedures governing the purchase, sale, and other dispositions of our
securities by directors, officers, and employees that we believe are reasonably designed to promote compliance with insider
trading laws, rules and regulations, and applicable Nasdaq listing standards. Our insider trading policy states, among other things,
that our directors, officers, and employees are prohibited from trading in such securities while in possession of material,
nonpublic information. The foregoing summary of our insider trading policies and procedures does not purport to be complete
and is qualified by reference to our Insider Trading Policy filed as an exhibit to this Annual Report on Form 10-K. In addition,
with regard to the Company's trading in its own securities, it is our policy to comply with the federal securities laws and the
applicable exchange listing requirements.
ITEM 11. EXECUTIVE COMPENSATION
As a smaller reporting company, we have opted to comply with the executive compensation rules otherwise applicable to
“smaller reporting companies,” as such term is defined in Rule 12b-2 under the Exchange Act.
This section provides certain compensation-related information for (1) all individuals who served as our CEO during any
part of the year ended December 31, 2024, and (2) our two most highly compensated executive officers (other than our CEO)
who were serving as executive officers as of December 31, 2024 (together, our “Named Executive Officers”).
Named Executive Officers
Our Named Executive Officers for the year ended December 31, 2024, which consists of our principal executive officer
and our two other most highly compensated executive officers, are:
• Larry Jasinski, our CEO;
• Charles Remsberg, our Chief Sales Officer; and
• Jeannine Lynch, our Vice President of Market Access and Strategy.
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2024 Summary Compensation Table
The following table provides information regarding the total compensation awarded to, earned by, or paid to our Named
Executive Officers for services rendered to us in all capacities for the fiscal years ended December 31, 2023, and 2024.
Name and
Principal
Position
Year
Salary
($)
Stock Awards
($)(1)
Non-Equity
Incentive Plan
Compensation($)
Total
($)
Larry Jasinski,
Chief Executive Officer and Director
2024
442,312
—
30,962(2)
473,274
2023
442,312
167,714
278,657(3)
888,683
Charles Remsberg,
Chief Sales Officer
2024
375,000
—
—
375,000
2023
125,000
140,857
—
265,857
Jeannine Lynch,
Vice President of Market Access and Strategy
2024
359,004
—
—
359,004
2023
351,104
82,500
113,058
(3)
546,662
(1) Amounts represent the aggregate grant date fair value of such awards computed in accordance with Financial Accounting Standards Board Accounting
Standards Codification Topic 718 (“FASB ASC Topic 718”). The fair value of restricted stock units (“RSUs”) granted is determined based on the price
of the Company’s ordinary shares on the date of grant. This amount does not correspond to the actual value that may be recognized by the Named
Executive Officer upon the vesting and subsequent settlement of the restricted stock units. The valuation assumptions used in determining such
amounts are described in Notes 2m and 9b to our consolidated financial statements included in our 2024 Annual Report.
(2) Amounts represent the annual bonuses paid with respect to achievement of the Company and, if applicable, individual performance objectives on
account of fiscal year 2024.
(3) Amounts represent the annual bonuses paid with respect to achievement of the Company and, if applicable, individual performance objectives on
account of fiscal year 2023.
Pursuant to regulations promulgated under the Israel Companies Law, we are required to disclose the total compensation
earned during 2024 by our five most highly-compensated office holders (as defined in the Israel Companies Law). Three of such
individuals are our Named Executive Officers, as defined above, and their respective total compensation for 2024 is set forth in
the Summary Compensation Table. The other two individuals, and their respective total compensation for 2024, is as follows:
Name and
Principal
Position
Salary
($)
Stock Awards
($)(1)
Non-Equity
Incentive Plan
Compensation($)
(2)
All Other
Compensation
($)
Total
($)
Michael Lawless,
Chief Financial Officer
323,621
—
11,410
—
335,031
Miri Pariente,
Vice President of Operations,
Regulatory and Quality(3)
191,048
—
10,000
94,303(4)
295,351
(1) Amounts represent the aggregate grant date fair value of such awards computed in accordance with Financial Accounting Standards Board Accounting
Standards Codification Topic 718 (“FASB ASC Topic 718”). The fair value of RSUs granted is determined based on the price of the Company’s
ordinary shares on the date of grant. This amount does not correspond to the actual value that may be recognized by the individuals listed in the table
above upon the vesting and subsequent settlement of the restricted stock units. The valuation assumptions used in determining such amounts are
described in Notes 2m and 9b to our consolidated financial statements included in our 2024 Annual Report.
(2) Amounts represent the annual bonuses paid with respect to achievement of the Company and, if applicable, individual performance objectives on
account of fiscal year 2024.
(3) The amounts set forth for each of Ms. Pariente and Mr. Adar in the columns “Salary,” “Non-Equity Incentive Plan,” and “All Other Compensation”
represent payments, contributions and/or allocations that were made in New Israel Shekels (“NIS”) and have been translated to U.S. dollars according
to the average exchange rate on the applicable period.
(4) Consists of $55,929 for payments, contributions and/or allocations for social benefits and the aggregate incremental cost to the Company of $38,374
with respect to Ms. Pariente’s personal use of a Company-leased car.
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Narrative Disclosure to the 2024 Summary Compensation Table
Our compensation committee reviews and approves the compensation of our executive officers and is primarily
responsible for determining the
compensation for the Named Executive Officers and office holders (within the meaning of the
Israeli Companies Law) consistent with our overall executive compensation philosophy. Our compensation committee reviews
and discusses the compensation of
other officers with the chief executive officer and considers overall Company performance
against goals, individual executive performance, and internal and external equity as key factors in those decisions. We develop
our compensation programs
after reviewing publicly available compensation data. Aon advises the compensation committee on
all of the principal aspects of executive compensation. Aon attends meetings of the compensation committee when requested to
do so. Aon reports directly
to the compensation committee and not to management, although it meets with management for
purposes of gathering information for its analyses and recommendations. The compensation committee has assessed the
independence of Aon consistent with SEC
regulations and Nasdaq listing standards and has concluded that the engagement of
Aon does not raise any conflict of interest.
Base Salaries
At the beginning of 2024, our compensation committee reviewed and approved the base salaries of the Named Executive
Officers based on an analysis of external market
conditions and individual performance against goals. The table below sets forth
the base salaries for each of the Named Executive Officers for 2024:
Name
2024 Base
Salary ($)
Larry Jasinski
442,312
Charles Remsberg
375,000
Jeannine Lynch
359,004
2024 Non-Equity Incentive Plan
All employees who have bonus features in their employment agreements, including our Named Executive Officers, were
eligible to participate in a
non-equity incentive plan for fiscal year 2024, pursuant to which employees were eligible to receive a
bonus with respect to their performance in such year. Each Named Executive Officer’s target was equal to a specified percentage
of his or her
base salary, and the actual bonus is paid based on the achievement of certain business and personal performance
objectives for the 2024 fiscal year. Not all goals were required to be satisfied for a Named Executive Officer to receive a portion
of
the bonus. The principal business performance objective under the non-equity incentive plan for 2024 was based on achieving
specified financial goals or milestones as set forth in the Compensation Policy as approved by our shareholders. These
objectives
were allocated as 30% for revenue targets, 15% for market development targets and 30% for net loss targets. A personal
performance objective, which is subjective in nature, made up the remaining 25%.
If the target was met in all categories of the business performance objective, 100% of the Named Executive Officer’s
bonus was to be paid. The
percentage of the bonus to be paid varied depending on the specific target and the level of
achievement.
In February 2025, the compensation committee completed an evaluation of the Company’s overall performance for 2024
and the Named Executive
Officers’ respective contributions in achieving this performance. The compensation committee’s
review was based on Company performance against business objectives, as well as personal performance against individual goals
established by the
compensation committee. Following such review, our Board (following the recommendation of the
compensation committee) approved the bonuses for the Named Executive Officers.
91
Equity Compensation
Our equity grant program is intended to align the interests of our Named Executive Officers with those of our
shareholders and to motivate them to
make important contributions to our performance. In 2024, no RSU grants were made due
to the non-approval of the 2024 Incentive Compensation Plan.
Employee Benefits and Perquisites
We currently maintain the Lifeward, Inc. 401(k) Plan, a defined contribution plan, or the 401(k) Plan, for the benefit of
our employees, including
our Named Executive Officers, who satisfy certain eligibility requirements. Our Named Executive
Officers were eligible to participate in the 401(k) Plan on the same terms as our other full-time employees. We believe that
providing a vehicle for
retirement savings though our 401(k) Plan adds to the overall desirability of our executive compensation
package and further incentivizes our employees, including our Named Executive Officers.
Currently, we do not view perquisites or other personal benefits as a significant component of our Compensation Policy.
Equity Grant Timing
Our policies and practices regarding the granting of equity awards are carefully designed to ensure compliance with applicable
securities laws and to maintain the integrity of our
executive compensation program. The compensation committee of our board
of directors is responsible for the timing and terms of equity awards to executives and other eligible employees.
The timing of equity award grants is determined with consideration to a variety of factors, including but not limited to, the
achievement of pre-established performance goals and
market conditions. We do not follow a predetermined schedule for the
granting of equity awards. In determining the timing and terms of an equity award, the board of directors or the compensation
committee may consider material
nonpublic information to ensure that such grants are made in compliance with applicable laws
and regulations. The board’s or the compensation committee’s procedures to prevent the improper use of material
nonpublic information in connection with
the granting of equity awards include oversight by legal counsel and, where
appropriate, delaying the grant of equity awards until the public disclosure of such material nonpublic information.
We are committed to maintaining transparency in our executive compensation practices and to making equity awards in a manner
that is not influenced by the timing of the disclosure
of material nonpublic information for the purpose of affecting the value of
executive compensation. We regularly review our policies and practices related to equity awards to ensure they meet the evolving
standards of corporate governance.
Employment Agreements of Named Executive Officers
Each of Larry Jasinski, our CEO, Charles Remsberg, our Chief Sales Officer, and Jeannine Lynch, our Vice President of
Market Access and Strategy,
previously entered into an employment agreement with our Subsidiary. These employment
agreements set forth their respective terms of employment, which terms are generally applicable to all of our executives, covering
matters such as vacation,
health and other benefits. The following are descriptions of the material terms of our Named Executive
Officers’ employment agreements.
Larry Jasinski
On January 17, 2011, we entered into an employment agreement with Mr. Jasinski, pursuant to which he has served as the
CEO of the Company since
February 12, 2012 (as amended from time to time, the “Jasinski Employment Agreement”). The
Jasinski Employment Agreement provides for an annual base salary, subject to annual increases in the discretion of, the
Company, and an annual performance
bonus. In accordance with previous shareholder approvals, and effective as of January 1,
2024, the annual base salary was $442,312. The annual performance bonus was originally set at up to 35% of annual base salary.
In 2020, this was increased to
an annual performance bonus of up to 70% of annual base salary for achieving 100% of targets
(with adjustment upward or downward for performance exceeding or failing to meet such objectives, respectively).
92
In the event that Mr. Jasinski’s employment is terminated by the Company without “Cause” (as defined in the Jasinski
Employment Agreement ), or if
Mr. Jasinski terminates his employment for “Good Reason” (as defined in the Jasinski
Employment Agreement), he will be entitled to certain severance payments and benefits, including: (i) a lump sum payment
equal to 90 days of his base salary, (ii)
an annual performance bonus (calculated based on the assumption that to the extent
performance objectives were achieved in the six-month period preceding his termination, they will also be achieved in the six
months following termination), (iii)
reimbursement for any COBRA or other medical, dental and vision premiums for six months
following his termination and (iv) continued participation in any employee and executive benefit programs in effect as of his
termination and reimbursement for
the premium or other fees associated with continuation in any insurance program available to
the Company’s employees as a non-employee or in a comparable program if participation as a non-employee would be barred.
The Jasinski Employment Agreement
further provides that if Mr. Jasinski’s employment is terminated without Cause or by Mr.
Jasinski for Good Reason, any unvested portion of the options promised in the Jasinski Employment Agreement, which would
have vested during the six months
following such termination had Mr. Jasinski remained employed by the Company, will
automatically vest. If Mr. Jasinski terminates his employment without Good Reason, he will be entitled to receive a pro-rated
amount of his annual performance bonus
as determined in good faith by the Board. Mr. Jasinski is not entitled to any severance if
he is terminated by the Company for Cause.
The Jasinski Employment Agreement was amended in 2020 to provide that if a “Change of Control” (as defined in the
Jasinski Employment Agreement)
occurs, and within one year following such Change of Control Mr. Jasinski is terminated
without Cause or he resigns for Good Reason, Mr. Jasinski will be entitled to severance of 18 months’ salary as well as an annual
bonus for the year in which
the termination occurs (assuming achievement of 100% of milestones and targets set by the board of
directors).
The employment agreement is governed by the laws of the State of Delaware and contains non-solicitation and non-
competition covenants (each of
which remains in effect during the term of employment and for 12 months following termination
of employment) and trade secrets and inventions clauses.
Charles Remsberg
We entered into an employment agreement with Mr. Remsberg, pursuant to which he has served as our Chief Sales
Officer since August
11, 2023 (as amended from time to time, the “Remsberg Employment Agreement”). The Remsberg
Employment Agreement provides for an annual base salary of $375,000 and is subject to increases as may be determined from
time to time by the compensation
committee of the Board, and an annual performance bonus up to 35% of annual base salary,
subject to the achievement of objectives as determined by the compensation committee of the Board. The Remsberg Employment
Agreement also provides that Mr.
Remsberg would receive, as an inducement grant, a restricted stock unit award covering 28,571
ordinary shares, as adjusted to reflect the 1-for-7 reverse share split of the ordinary shares effected by the Company on March 15,
2024 (the “Remsberg
Inducement Award”), which award vests in four equal annual instalments commencing as of the grant date.
The terms of the Remsberg Inducement Award are generally consistent with the terms applicable to restricted stock unit awards
set forth in our
2014 Equity Incentive Plan (as amended from time to time, the “2014 Plan”); provided, however, that in the event
Mr. Remsberg’s ’s employment with the Company is terminated by the Company (or its successor) not for “Cause”, or if Mr.
Remsberg
terminates his employment for “Good Reason” within 90 days prior to a Change of Control (as all such terms are
defined in the Remsberg Employment Agreement) or one year following a Change of Control, the Remsberg Inducement Award
will vest upon the
later to occur of (i) the effective date of termination of employment, (ii) the release Effective Date (as defined
in the Remsberg Employment Agreement) and (iii) the date such Change of Control is consummated.
The Remsberg Employment Agreement is for an initial term through August 11, 2025, and automatically renews for
additional terms of
twelve-months each, provided, however, that either party may terminate the Remsberg Employment
Agreement, effective as of the last date of any renewal term by providing at least 90 days prior written notice. The Remsberg
Employment Agreement also
provides that the Company may terminate the Agreement immediately without providing prior
notice in the event of death or disability, or for cause. In the event that Mr. Remsberg’s employment is terminated by the
Company without cause or if Mr.
Remsberg resigns for Good Reason not in connection with a Change of Control Event (as
defined below), Mr. Remsberg will be entitled to a severance payment equal to (i) 50% of the sum of (a)his then-current base
salary, plus (b) 50% of his annual
Target Bonus (as defined in the Remsburg Employment Agreement), that Mr. Remsberg would
have received had he not been terminated prior to the applicable payment date of the Target Bonus representing a pro-rated six-
month payment of the annual
target bonus, payable in equal instalments over a period of six months following such termination,
and (iii) the replacement cost of his benefits for six months following such termination.
The Remsberg Employment Agreement provides that if a Change of Control occurs, and within 90 days prior or one year
following such Change of Control Mr. Remsberg is terminated without Cause or he
resigns for Good Reason (a “Change of
Control Event”), Mr. Remsberg will be entitled to severance of 12 months of base salary, an amount equal to Mr. Remsberg’s
annual target bonus (assuming achievement of 100% of milestones and targets set by
the board of directors), payable promptly
following such termination, and payment of the portion of COBRA premiums equal to the amount that we would have paid to
provide health insurance to Mr. Remsberg had Mr. Remsberg remained employed with us
for twelve months following such
termination. In addition, as stated above, in the case of a Change of Control Event, the Remsberg Inducement Award will vest
upon the effective date of termination of employment. The Remsberg Employment Agreement
is governed by the laws of the
Commonwealth of Massachusetts and contains non-solicitation and non-competition covenants (each of which remains in effect
during the term of employment and for a period of 12 months following termination of
employment) and trade secrets and
inventions clauses.
93
Jeannine Lynch
On July 22, 2021, we entered into an employment agreement with Jeannine Lynch to serve as Vice President of Market
Access and Strategy of the Company,
effective August 31, 2021 (the “Lynch Employment Agreement”). Pursuant to the terms of
the Lynch Employment Agreement, Ms. Lynch is entitled to (i) an annual base salary of $320,000, which was increased to
$361,637 effective April 1, 2024,
subject to increases as may be determined from time to time by the compensation committee of
the Board and (ii) an annual performance bonus up to 35% of annual base salary, subject to the achievement of objectives as
determined by the
compensation committee of the Board. The Lynch Employment Agreement may be terminated by the
Company upon prior written notice.
In the event that (x) Ms. Lynch’s employment is terminated for any reason other than for “cause” (as defined therein),
death, or disability, (y)
the Company moves its primary office outside of the United States and/or reduces Ms. Lynch’s title or
primary responsibilities, or (z) the Company moves Ms. Lynch’s principal location of work, the Company shall pay monthly
severance to Ms. Lynch at
the rate per annum of her salary and bonus (and the replacement cost of her benefits) at the time of
such termination for a period from the date of such termination to the date which is six months after such termination.
In the event that the Company is subject to a merger or acquisition where Ms. Lynch is terminated during the 12-month
period following the closing
of the transaction, 100% of the then-unvested and outstanding equity awards held by Ms. Lynch will
vest upon such termination.
Ms. Lynch is not entitled to receive any termination or change in control benefits under our Compensation Policy.
The Lynch Employment Agreement is governed by the laws of the Commonwealth of Massachusetts and contains non-
solicitation and non-competition
covenants (each of which remains in effect during the term of employment and for a period of
12 months following termination of employment) and trade secrets and inventions clauses.
Outstanding Equity Awards at 2024 Fiscal Year-End
The following table sets forth information concerning outstanding equity awards as of December 31, 2024, for each
Named Executive Officer. This
information reflects the number of ordinary shares of the Company after the 1-for-7 reverse share
split of the ordinary shares effected by the Company on March 15, 2024.
Option Awards
Stock Awards
Name
Grant Date(1)
Number of
Securities
Underlying
Unexercised
Options
Exercisable
(#)
Number of
Securities
Underlying
Unexercised
Options
Unexercisable
(#)
Option
Exercise
Price
($)
Option
Expiration
Date
Number of
Shares or
Units of
Stock
that Have
Not Vested
(#)
Market
Value of
Shares or
Units of
Stock that
Have Not
Vested(2)
($)
Larry Jasinski
6/27/2017(3)
713
—
367.50
6/27/2027
5/3/2018(4)
1,249
—
188.13
5/3/2028
3/27/2019(5)
1,774
—
37.56
3/27/2029
5/21/2021(6)
5,357
9,268
8/2/2022(7)
14,288
24,718
9/13/2023(8)
21,429
37,072
Charles Remsberg
8/11/2023(9)
21,429
37,072
Jeannine Lynch
8/31/2021(10)
4,465
7,724
8/2/2022(11)
9,823
16,994
6/30/2023(12)
14,732
25,486
(1)
Represents grant dates of the stock option and RSU awards.
(2)
The amount listed in this column represents the product of $1.73, which was the closing market price of the Company’s ordinary shares as of
December 31, 2024, multiplied by the number of shares subject to the award.
(3)
This award is fully vested.
(4)
This award is fully vested.
(5)
This award is full vested.
(6)
¼th of the RSU award vests on an annual basis commencing on May 21, 2022, and ending on May 21, 2025.
(7)
¼th of the RSU award vests on an annual basis commencing on August 2, 2023, and ending on August 2, 2026.
(8)
¼th of the RSU award vests on an annual basis commencing on September 13, 2024, and ending on September 13, 2027.
(9)
¼th of the RSU award vests on an annual basis commencing on August 11, 2024, and ending on August 11, 2027.
(10)
¼th of the RSU award vests on an annual basis commencing on August 31, 2022, and ending on August 31, 2025.
(11)
¼th of the RSU award vests on an annual basis commencing on August 2, 2023, and ending on August 2, 2026.
(12)
¼th of the RSU award vests on an annual basis commencing on June 30, 2024, and ending on June 30, 2027.
94
Potential Payments Upon Termination or Change in Control
We have adopted, pursuant to shareholder approval, our Compensation Policy, which provides for certain benefits to our
executive officers upon
retirement or termination, whether or not in the event of a change in control. We may memorialize any of
these benefits in arrangements we enter into with individual executive officers. Under the Compensation Policy, executive
officers may be
entitled to advance notice of termination of up to 12 months and to obtain up to 12 months of post-termination
health insurance. In addition to receiving severance pay as required or facilitated under the local laws of the relevant jurisdiction,
executive officers may have the right to receive up to 12 months of base salary (18 months in the case of the CEO), bonus and
benefits, taking into account the period of the officer’s service or employment, his or her performance during employment
and
contribution to the Company’s targets and profits and the circumstances surrounding termination of his or her employment. These
benefits are designed to attract and motivate highly skilled professionals to join our Company and to enable us to
retain key
management.
To the extent our Named Executive Officers are entitled to receive severance (except for any severance payments
mandated by Israeli law for our
Israeli employees) or change in control benefits, such entitlements are contractually agreed upon
between the Company and the applicable Named Executive Officer. Accordingly, for further information regarding the payments
and benefits our Named
Executive Officers are entitled to receive upon a termination or change in control, please see “Executive
Compensation — Employment Agreements of Named Executive Officers.”
Compensation Committee Interlocks and Insider Participation
None of the members of the compensation committee is, or has ever been, an officer or employee of the Company or any
of its subsidiaries. In
addition, during the last fiscal year, no executive officer of the Company served as a member of the board of
directors or the compensation committee of another entity that has one or more executive officers serving on the Company’s
compensation
committee or the Board.
Policy for Recoupment of Incentive Compensation (Clawback Policy)
On September 13, 2023, we adopted an amended and restated policy for recoupment of incentive compensation (the
“Clawback Policy”) in compliance
with the requirements of the Dodd-Frank Act, final SEC rules and applicable Nasdaq listing
standards (the “final clawback rules”), which covers our current and former executive officers, including all of our named
executive officers. Under the
Clawback Policy, in the event that we are required to prepare a restatement of our previously issued
financial statements due to our material noncompliance with any financial reporting requirement under securities laws, we are
required to recover
(subject to certain limited exceptions described in the Clawback Policy and permitted under the final
clawback rules) any cash or equity incentive-based compensation received by any current or former executive officer after the
effective date of
the Clawback Policy and in the three years prior to the date we are required to restate our financial statements
that is in excess of the amount that would have been received based on the restated financial statements.
95
Director Compensation
The following table provides certain information concerning the compensation for services rendered in all capacities by
each non-employee director
serving on our Board during the year ended December 31, 2024, other than Mr. Larry Jasinski, our
CEO, who did not receive additional compensation for his services as director and whose compensation is set forth in the
Summary Compensation Table
found elsewhere in this annual report.
Name
Fees Earned
in Cash ($)
Stock Awards
($)(1)
Total
($)
Jeff Dykan
25,455(2)
—
25,455
Dr. John William Poduska
44,426(3)
—
44,426
Randel Richner
39,332(4)
—
39,332
Joseph Turk
39,417(5)
—
39,417
Hadar Levy
34,447(6)
—
34,447
Michael Swinford
25,598(7)
50,000
75,598
Robert Marshall
8,164(8)
—
8,164
(1)
Amounts represent the aggregate grant date fair value of such awards issued under the 2014 Plan as an annual award to the applicable directors,
computed in accordance with FASB ASC Topic 718, which for all directors represents an award
of 50,000 RSUs. These amounts reflect the number
of ordinary shares of the Company after the 1-for-7 reverse share split of the ordinary shares effected by the Company on March 15, 2024. The fair
value of RSUs granted is determined based
on the price of the Company’s ordinary shares on the date of grant. This amount does not correspond to
the actual value that may be recognized by the non-employee director upon the vesting of the RSUs. All RSUs become vested and exercisable
in
four equal quarterly instalments starting three months following the grant date. The valuation assumptions used in determining such amounts are
described in Notes 2m and 9b to our consolidated financial statements included in our 2024
Annual Report.
(2)
Represents $15,796 earned by Mr. Dykan as a portion of the annual retainer for serving as our Chairman of the Board of Directors, $7,065 for
attending meetings of the Board of Directors, $2,594 for serving as a chairman of the audit
committee. Mr. Dykan resigned from his positions as a
member of the Board and as Chairman of the Board of Directors effective September 4, 2024.
(3)
Represents $22,570 earned by Dr. Poduska as an annual retainer for serving as a non-employee director on the Board of Directors, $12,823 for
attending meetings of the Board of Directors, $4,519 for serving as a member of the audit
committee, $4,514 for serving as the chairman of the
compensation committee.
(4)
Represents $22,570 earned by Ms. Richner as an annual retainer for serving as a non-employee director on the Board of Directors, $12,949 for
attending meetings of the Board of
Directors, $3,813 for serving as a member of the compensation committee.
(5)
Represents $11,348 earned by Mr. Turk as a portion of the annual retainer for serving as our Chairman of the Board of Directors, $11,222 as an
annual retainer for serving as a non-employee director on the Board of Directors, $13,056 for
attending meetings of the Board of Directors and
$3,791 for serving as a member of the compensation committee. Mr. Turk was appointed Chairman of the Board of Directors effective September 4,
2024.
(6)
Represents $22,570 earned by Mr. Levy as an annual retainer for serving as a non-employee director on the Board of Directors, $7,825 for attending
meetings of the Board of Directors and $4,052 for serving as a member of the audit
committee.
(7)
Represents $15,851 earned by Mr. Swinford as a portion of the annual retainer for serving as a non-employee director on the Board of Directors,
$9,747 for attending meetings of the Board of Directors. Mr Swinford joined the Board of Directors on April 18, 2024, and his retainer was prorated
accordingly.
(8)
Represents $3,710 earned by Mr. Marshall as a portion of the annual retainer for serving as a non-employee director on the Board of Directors,
$2,528 for attending meetings of the Board of Directors and $1,926 for serving as a member of the audit committee. Mr Marshall joined the Board of
Directors on November 2, 2024, and his retainer was prorated accordingly.
96
The aggregate number of ordinary shares subject to outstanding options and RSU awards for each of our non-employee
directors as of December 31,
2024, is shown below. These amounts reflect the number of ordinary shares of the Company after
the 1-for-7 reverse share split of the ordinary shares effected by the Company on March 15, 2024. Information regarding Mr.
Jasinski’s outstanding equity
awards as of December 31, 2024, is set forth in the Outstanding Equity Awards Table found
elsewhere in this annual report.
Name
Number of
Shares
Dr. John William Poduska
69
Randel Richner
—
Joseph Turk
—
Hadar Levy
—
Hadar Levy
—
Michael Swinford
5,020
Robert Marshall
—
Cash compensation for our independent, non-employee directors’ services is governed by previous decisions of our
compensation committee, Board and
shareholders, and is subject to terms and conditions of our Compensation Policy.
Additionally, each independent, non-employee director currently receives upon his or her appointment a restricted stock unit
award (the “Initial RSU Award”), with such
Initial RSU Award having a value equal to $50,000 on the date of grant (as
determined based on the closing price of our ordinary shares on the date of grant). Each independent, non-employee director is
also entitled to receive an annual grant of
RSUs (the “Annual RSU Award”), with such Annual RSU Award having a value equal
to $50,000 on the date of grant. The Initial RSU Award and Annual RSU Award each vest ratably in four equal quarterly
instalments starting three months from the date of
grant (subject to the non-employee director’s continued service with the
Company through each applicable vesting date), with the vesting of such awards to be accelerated upon certain change of control
events in accordance with the Compensation
Policy. At our 2020 annual general meeting, our shareholders approved an
amendment to our then-current Compensation Policy whereby (x) all or a portion of our non-directors’ cash compensation may
be paid in equity, at the discretion of our
compensation committee, in order to preserve the Company’s cash, and (y) equity
compensation of directors will be payable in the first instance in RSUs but such compensation may also be payable, at the
discretion of our compensation committee, in
cash, based on a formula to be determined and with such payment provisions as
shall result in the equivalent effect of vesting of RSUs, in order to preserve the equity available for incentives.
In addition, each director is reimbursed for out-of-pocket expenses in connection with attending meetings of the Board of
Directors or committees.
Directors are also indemnified and insured by us for actions associated with being a director to the
extent permitted under Israeli law. Further, none of our non-employee directors receive any benefits upon termination of their
directorship
positions. The compensation committee reviews director compensation annually and makes recommendations to the
Board of Directors with respect to compensation and benefits provided to the members of the Board.
97
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED
STOCKHOLDER MATTERS
As of March 3, 2025, there were 10,630,281 ordinary shares outstanding, excluding ordinary shares issuable in
connection with the exercise of outstanding warrants or outstanding options or upon the vesting of restricted stock units
(“RSUs”). The voting rights of all shareholders are the same.
The following table sets forth certain information as of March 3, 2025, concerning the number of ordinary shares
beneficially owned, directly or indirectly, by:
(1) each person, or group of affiliated persons, known to us to beneficially own more than 5% of our outstanding
ordinary shares;
(2) each of our directors and director nominees;
(3) each of our Named Executive Officers (as defined under “Summary Compensation Table” above); and
(4) all of our directors and executive officers as a group.
Beneficial ownership is determined in accordance with the rules of the SEC based on voting and investment power with
respect to such shares. Shares subject to options or warrants that are currently exercisable or exercisable within 60 days of March
3, 2025 and shares subject to RSUs that were vested as of or will vest within 60 days of March 3, 2025 are deemed to be
outstanding and to be beneficially owned by the person holding such options, RSUs or warrants for the purpose of computing the
percentage ownership of such person. However, such shares are not deemed to be outstanding and to be beneficially owned for
the purpose of computing the percentage ownership of any other person.
Under the terms of the terms of certain outstanding warrants, a holder may not exercise the warrants to the extent that
such shareholder, together with its affiliates, would beneficially own, after such exercise, more than 4.99% or 9.99% of the
ordinary shares then outstanding, as applicable (subject to the right of the shareholder with a 4.99% ownership limitation to
increase or decrease such beneficial ownership limitation upon notice to us, provided that such limitation cannot exceed 9.99%),
and provided that any increase in the beneficial ownership limitation shall not be effective until 61 days after such notice is
delivered. Consistent with beneficial ownership reporting principles under Section 13(d) of the Exchange Act, the below table
only shows ordinary shares underlying warrants that are deemed to be beneficially owned, assuming compliance with these
ownership limitations.
All information with respect to the beneficial ownership of any principal shareholder has been furnished by such
shareholder or is based on our filings with the SEC and, unless otherwise indicated below, we believe that persons named in the
table have sole voting and sole investment power with respect to all the ordinary shares shown as beneficially owned, subject to
community property laws, where applicable. The ordinary shares beneficially owned by our directors and officers may include
shares owned by their respective family members, as to which such directors and officers disclaim beneficial ownership. Unless
otherwise noted below, each shareholder’s address is c/o Lifeward Ltd., 200 Donald Lynch Blvd., Marlborough, MA 01752.
98
Ordinary Shares Beneficially Owned
Name
Number of
Shares
Percentage
5%-or-More Beneficial Owners:
Lind Global Funds(1)
857,996
8.1%
Named Executive Officers and Directors:
Larry Jasinski(2)
65,455
*
Randel Richner(3)
21,567
*
Dr. John William Poduska(4)
20,102
*
Joseph Turk(5)
33,134
*
Hadar Levy(6)
15,656
*
Michael Swinford(7)
65,040
*
Robert Marshall(8)
—
*
Jeannine Lynch(9)
18,641
*
Michael A. Lawless(10)
26,112
*
Charles Remsberg (11)
7,142
*
Almog Adar(12)
16,515
*
All directors and executive officers as a group (eleven persons) (13)
289,364
2.7%
*
Ownership of less than 1%.
(1)
Based on a Schedule 13D/A filed on January 8, 2025, by Lind Global Fund II LP (“Global Fund II”), Lind Global Partners II LLC, Lind Global
Macro Fund LP, Lind Global Partners LLC (together, the “Lind Global Funds”) and Jeff Easton (together with the Lind Global Funds, the
“Reporting Persons”). The foregoing excludes warrants to purchase 247,334 ordinary shares, because each of the warrants includes a provision
limiting the holder’s ability to exercise the warrants if such exercise would cause the holder to beneficially own greater than 9.99% of the ordinary
shares then outstanding. Without such provisions, the Reporting Persons may have been deemed to have beneficial ownership of the ordinary shares
underlying such warrants. Jeff Easton, the managing member of Lind Global Partners II LLC and Lind Global Partners LLC, may be deemed to have
sole voting and dispositive power with respect to the shares held by Lind Global Macro Fund, LP and Lind Global Fund II LP. The principal
business address of the Reporting Persons is 444 Madison Avenue, Floor 41, New York, N.Y. 10022.
(2)
Consists of 61,719 ordinary shares, including 3,750 shares underlying RSUs vesting within 60 days, and 3,736 exercisable options to purchase
ordinary shares.
(3)
Consists of 21,567 ordinary shares.
(4)
Consists of 20,033 ordinary shares, including exercisable options to purchase 69 ordinary shares.
(5)
Consists of 33,134 ordinary shares.
(6)
Consists of 16,656 ordinary shares.
(7)
Consists of 65,040 ordinary shares, including 2,510 shares underlying RSUs vesting within 60 days.
(8)
Mr. Marshall was appointed to our Board effective November 2, 2024.
(9)
Consists of 18,641 ordinary shares.
(10)
Consists of 26,112 ordinary shares.
(11)
Consists of 7,142 ordinary shares.
(12)
Consists of 16,515 ordinary shares.
(13)
Consists of (i) 279,299 ordinary shares directly or beneficially owned by our executive officers and our nine directors other than Mr. Jasinski; (ii)
3,805 ordinary shares constituting the cumulative aggregate number of options granted to the executive officers and directors; and (iii) 6,260 shares
underlying RSUs vesting within 60 days.
Equity Compensation Plan Information
The following table provides certain aggregate information with respect to our ordinary shares that may be issued under
our equity compensation plans as of December 31, 2024. On August 19, 2014, we adopted the 2014 Plan. Pursuant to Section 1.3
of the 2014 Plan, no awards can be granted under the plan on or after ten years from the date of adoption of the 2014 Plan. As a
result, since August 19, 2024, we cannot grant any additional equity awards under the 2014 Plan. In addition, as of the date of
this annual report our shareholders have not approved a new equity incentive compensation plan. Accordingly, at this time we
cannot grant equity awards under an equity compensation plan approved by our shareholders.
99
The information below reflects a number of ordinary shares of the Company after the 1-for-7 reverse share split of the
ordinary shares effected by the Company on March 15, 2024.
Plan Category
Number of
securities to
be issued
upon exercise
of outstanding
options,
warrants and
rights
Weighted-
average
exercise price
of outstanding
options,
warrants and
rights
Number of
securities
remaining
available for
future issuance
under equity
compensation
plans (excluding
securities
reflected in
first column)
Equity compensation plans approved by security holders
331,816(1) $
187.94(2)
—(3)
Equity compensation plans not approved by security holders
—
—
—
Total
331,816
$
187.94
—
(1)
Represents shares issuable under our 2014 Plan upon exercise of options outstanding to purchase 4,573 shares and upon the settlement of
outstanding RSUs with respect to 327,243 shares.
(2)
The weighted-average exercise price is calculated based solely on the exercise prices of the outstanding options to purchase ordinary shares. It does
not reflect the ordinary shares that will be issued upon the vesting of outstanding awards of RSUs, which have no exercise price.
(3)
As described above, since August 19, 2024, we cannot grant any additional equity awards under the 2014 Plan, and as of the date of this annual
report our shareholders have not approved a new equity incentive compensation plan. Accordingly, at this time we cannot grant any equity awards
under an equity compensation plan approved by our shareholders.
100
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE
Director Independence
The information required by Item 407(a) of Regulation S-K is incorporated by reference herein from Item 10 above as set
forth under the caption “Director Independence.”
Certain Relationships and Related Transactions
See “Item 11. Executive Compensation —Employment Agreements of Named Executive Officers” above for a
description of employment agreements between us and the Named Executive Officers.
We describe below transactions and series of similar transactions which are currently proposed or to which we have been
or were a party since January 1, 2023, in which (a) the amount involved exceeds or exceeded the lesser of $120,000 or one
percent of the average of the Company’s total assets at year-end for the last two completed fiscal years and (b) any of our
directors, executive officers, beneficial owners of more than 5% of our ordinary shares, or any affiliates or members of the
immediate family of any of the foregoing persons, had or will have a direct or indirect material interest. Although we do not have
a formal written policy as to the approval of related party transactions, all related party transactions for which disclosure would
be required under Item 404 of Regulation S-K are approved based on procedures under Israeli law, as is duly memorialized in the
minutes of the meetings of the Board and audit committee, as applicable.
Transactions with Current and/or Former 5% Beneficial Owners
Since January 1, 2023, we entered into the following transactions with other shareholders who are currently 5% beneficial
owners or who we believe beneficially owned at the time of such transactions or became as a result of such transactions more
than 5% of our ordinary shares, based on a review of Schedule 13G filings made and Company records during such period.
Agreements with Directors, Officers and Others
Employment Agreements
We have entered into written employment agreements with each of our executive officers. These agreements provide for
notice periods of varying duration for termination of the agreement by us or by the relevant executive officer, during which time
the executive officer will continue to receive base salary and benefits. We have also entered into customary non-competition,
confidentiality of information and ownership of inventions arrangements with our executive officers. However, the enforceability
of the noncompetition provisions may be limited under applicable law.
Options
Since our inception we have granted options to purchase our ordinary shares to our officers and certain of our directors.
Such option agreements may contain acceleration provisions upon certain merger, acquisition, or change of control transactions.
Exculpation, Indemnification and Insurance
Our Articles of Association permit us to exculpate, indemnify and insure certain of our office holders to the fullest extent
permitted by the Israel Companies Law. We have entered into indemnification agreements with our office holders, exculpating
them from a breach of their duty of care to us to the fullest extent permitted by law and undertaking to indemnify them to the
fullest extent permitted by law, subject to certain exceptions, including with respect to liabilities resulting from our IPO to the
extent that these liabilities are not covered by insurance.
Consulting Agreement and Supplement Agreement with Randel E. Richner
At our 2022 annual meeting of shareholders, our shareholders approved the terms of a Consulting Agreement with
Richner Consultants LLC, a Delaware company (the “Consultant”) owned by Randel E. Richner, a member of our Board.
Pursuant to the Consulting Agreement, the Consultant provided us with the following services during 2022: strategic advisory
consultation on activities related to CMS, including reviewing Company submissions to CMS; reviewing the Company’s dossier
submitted to third-party insurers; coordinating and establishing lobbying efforts for the Company with U.S. government agencies;
review and support with respect to reimbursements from private payers and with on-going interactions with the U.S. Veterans
Benefits Administration; and other reimbursement-related matters as designated and agreed to with our CEO, including
international reimbursement activities as needed. The services to be provided under the Consulting Agreement by the Consultant
were provided solely by Ms. Richner.
101
The services were provided on an hourly basis at a rate of $425 per hour, payable by us on a monthly basis subject to the
Consultant providing monthly invoices for the review of both our Chairman of the Board and our CEO. Under the Consulting
Agreement, the aggregate total number of consulting hours provided by the Consultant could not exceed 282 hours.
The initial term of the Consulting Agreement commenced January 1, 2022, and expired December 31, 2022.
Approximately $119,850 was owed and paid to the Consultant for the initial term of the Consulting Agreement.
At our 2023 annual meeting of shareholders, our shareholders approved an extension of the Consulting Agreement until
the earlier of December 31, 2023 or such time as we receive approval from CMS. The extension term of the Consulting
Agreement commenced January 1, 2023, and expired December 31, 2023. Approximately $119,999 was owed and paid to the
Consultant for the extension term of the Consulting Agreement.
However, because the process of receiving reimbursement approval from CMS was far more complex and time-
consuming than was initially contemplated, Ms. Richner was required to invest far more time during each of 2022 and 2023 than
the maximum number of 282 consulting hours for each of 2022 and 2023 provided by the Consulting Agreement, as amended.
Ms. Richner also provided services during the first four months of 2024. In addition, as a result of expending so much time in
providing her consulting services to us, Ms. Richner was not able to take on other, higher-paying consulting assignments. The
actual number of additional hours invested by Ms. Richner during 2022 and 2023 in excess of the maximum number of 282 hours
per year provided in the Consulting Agreement, at her then-hourly rate of $425, and the hours expended by Ms. Richner in 2024
(for which Ms. Richner and we agreed that the hourly rate should be $550 per hour, which better represented Ms. Richner’s then-
new standard hourly rate), came to an aggregate of $297,000. At our 2024 annual meeting of shareholders, our shareholders
approved compensating Ms. Richner for such excess hours in the form of equity compensation pursuant to an Amendment and
Supplement Agreement among the Company, the Consultant and Ms. Richner (the “Supplement Agreement”), subject to
approval by our shareholders of a new equity compensation plan. The Supplement Agreement provided for a grant of equity
compensation to Ms. Richner (rather than to the Consultant) in the form of stock options to purchase our ordinary shares, to be
issued in three tranches as follows:
•
On November 10, 2024, options will be issued having an aggregate value of $120,000, calculated utilizing a Black-Scholes valuation
model based on the closing price of our ordinary shares on such date, but in no event will we issue such options in 2024 to purchase more
than 45,614 ordinary shares;
•
On November 11, 2025, options will be issued having an aggregate value of $120,000, calculated utilizing a Black-Scholes valuation
model based on the closing price of our ordinary shares on such date, but in no event will we issue such options in 2025 to purchase more
than 45,614 ordinary shares; and
•
On November 12, 2026, options will be issued having an aggregate amount of $57,000, calculated utilizing a Black-Scholes valuation
model based on the closing price of our ordinary shares on such date, but in no event will we issue such options in 2026 to purchase more
than 21,662 ordinary shares.
By way of example only, utilizing a Black-Scholes valuation of $2.35 per share underlying the options based on the
closing price of our ordinary shares of $3.90 on July 15, 2024, the number of shares underlying the three grants of options to be
made to Ms. Richner described above would have been 51,111, 51,111 and 10,668, respectively, but due to the caps described
above on the number of shares that can underlie grants of options to Ms. Richner, the number of shares would be 45,614, 45,614
and 10,66 respectively.
102
The grant provided that each of the stock options will vest immediately upon issuance and will be exercisable for a term
of seven years, whether or not Ms. Richner continues to serve as a member of the Board, the exercise price per share of the
options will be the closing price of our ordinary shares used for purposes of the respective Black-Scholes valuation, and the stock
options can be exercised on a net exercise basis. Finally, as long as Ms. Richner remains engaged by us as a member of the
Board, her ability to engage in any transactions in relation to the ordinary shares underlying the stock options will be subject to
our Insider Trading Policy.
As described above, as of the date of this annual report our shareholders have not approved a new equity incentive
compensation plan.
Distribution Agreement with CorLife for which Michael Swinford Serves As CEO
On March 6, 2025, we announced an agreement in which CorLife will become the exclusive distributor for the ReWalk
Personal Exoskeleton for individuals with workers’ compensation claims. Michael Swinford, a member of our Board, serves as
the Chief Executive Officer of Numotion, the parent company of CorLife. Our Board of Directors reviewed the financial terms
of the contract which were negotiated at arms-length and the transaction was approved by the Board.
Approval of Related Party Transactions Under Israeli Law
Disclosure of Personal Benefits or Other Interests of an Office Holder and Approval of Certain Transactions
The Israel Companies Law requires that an office holder promptly disclose to the board of directors any personal benefit
or other interest that he or she may have, and all related material information or documents, concerning any existing or proposed
transaction with the company. A personal benefit or other interest includes the individual’s own benefit or other interest and, in
some cases, a personal benefit or other interest of such person’s relative or an entity in which such individual, or his or her
relative, is a 5% or greater shareholder, director or general manager, or in which he or she has the right to appoint at least one
director or the general manager, but does not include a personal benefit or other interest stemming only from ownership of our
shares.
If an office holder has a personal benefit or other interest in a transaction, approval by the board of directors is required
for the transaction. Once an office holder has disclosed his or her personal benefit or other interest in a transaction, the board of
directors may approve an action by the office holder that would otherwise be deemed a breach of duty of loyalty. A company may
not, however, approve a transaction or action unless it is in the best interests of the company, or if the office holder is not acting
in good faith.
Special approval is required for an extraordinary transaction, which under the Israel Companies Law is defined as any of
the following:
•
a transaction other than in the ordinary course of business;
•
a transaction that is not on market terms; or
•
a transaction that may have a material impact on a company’s profitability, assets or liabilities.
An extraordinary transaction in which an office holder has a personal benefit or other interest requires approval first by
the company’s audit committee and subsequently by the board of directors. The compensation of, or an undertaking to indemnify
or insure, an office holder who is not a director requires approval first by the company’s compensation committee, then by the
company’s board of directors and, if such compensation arrangement or an undertaking to indemnify or insure is inconsistent
with the Company’s compensation policy or if the office holder is the Chief Executive Officer (apart from a number of specific
exceptions), then such arrangement is subject to shareholder approval by a simple majority, which must also include at least a
majority of the shares voted by all shareholders who are neither controlling shareholders nor have a personal benefit or other
interest in such compensation arrangement (alternatively, in addition to a simple majority, the total number of shares voted
against the compensation arrangement by non-controlling shareholders and shareholders who do not have a personal benefit or
other interest in the arrangement may not exceed 2% of our outstanding shares). We refer to this as the “Special Approval for
Compensation”. Arrangements regarding the compensation, indemnification or insurance of a director require the approval of the
compensation committee, board of directors and shareholders by a simple majority, in that order, and under certain
circumstances, a Special Approval for Compensation.
Generally, a person who has a personal benefit or other interest in a matter that is considered at a meeting of the board of
directors or the audit committee may not be present at such a meeting or vote on that matter unless the chairman of the board of
directors or the audit committee (as applicable) determines that he or she should be present in order to present the transaction that
is subject to approval. If a majority of the members of the board of directors or the audit committee (as applicable) have a
personal benefit or other interest in the approval of a transaction, then all directors may participate in discussions of the board of
directors or the audit committee (as applicable) on such transaction and in the voting, but shareholder approval is also required
for such transaction.
103
Disclosure of Personal Benefits or Other Interests of Controlling Shareholders and Approval of Certain Transactions
Pursuant to the Israel Companies Law, the disclosure requirements regarding personal benefits or other interests that
apply to directors and executive officers also apply to a controlling shareholder of a public company. In this context, a controlling
shareholder includes a shareholder who holds 25% or more of our outstanding shares if no other shareholder holds more than
50% of our outstanding shares. For this purpose, the holdings of all shareholders who have a personal benefit or other interest in
the same transaction will be aggregated. The approval of the audit committee, the board of directors and the shareholders of the
company, in that order, is required for (a) extraordinary transactions with a controlling shareholder or in which a controlling
shareholder has a personal benefit or other interest, (b) our engagement with a controlling shareholder or his or her relative,
directly or indirectly, for the provision of services to us, (c) the terms of engagement and compensation of a controlling
shareholder or his or her relative who is not an office holder or (d) our employment of a controlling shareholder or his or her
relative, other than as an office holder. In addition to shareholder approval by a simple majority, the transaction must be approved
by a Special Majority.
To the extent that any such transaction with a controlling shareholder is for a period extending beyond three years,
approval is required once every three years, unless, with respect to certain transactions, the audit committee determines that the
duration of the transaction is reasonable under the circumstances.
Arrangements regarding the compensation, indemnification or insurance of a controlling shareholder in his or her capacity
as an office holder require the approval of the compensation committee, board of directors and shareholders, in that order, by a
Special Majority, and the terms must be consistent with our Compensation Policy.
Pursuant to regulations promulgated under the Israel Companies Law, certain transactions with a controlling shareholder
or his or her relative, or with directors, that would otherwise require approval of our shareholders may be exempt from
shareholder approval upon certain determinations of the audit committee and board of directors. Under these regulations, we
must publish these determinations, and a shareholder holding at least 1% of our outstanding shares may, within 14 days of after
publication, demand shareholder approval despite such determinations.
104
ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES
Principal Accounting Fees and Services
The following table sets forth, for each of the years indicated, the fees expensed by Kost Forer Gabbay & Kasierer, our
independent registered public accounting firm, in each such year.
2023
2024
($ in thousands)
Audit Fees(1)
$
418 $
250
Audit-Related Fees(2)
$
95 $
—
Tax Fees(3)
$
31 $
30
All Other Fees(4)
$
120 $
4
Total:
$
664 $
284
(1)
“Audit fees” include fees for services performed by our independent public accounting firm in connection with our annual audit for 2023 and 2024,
fees related to the review of quarterly financial statements, fees related to the pro forma financial information and fees for consultation concerning
financial accounting and reporting standards. Fees in 2023 also include services by our accounting firm for the audit of AlterG for the years 2021 and
2022 prior to our acquisition of AlterG in August 2023.
(2)
“Audit-related fees” relate to assurance and associated services that are traditionally performed by an independent auditor, including accounting
consultation and consultation concerning financial accounting, reporting standards and due diligence.
(3)
“Tax fees” include fees for professional services rendered by our independent registered public accounting firm for tax compliance, transfer pricing
and tax advice on actual or contemplated transactions.
(4)
“All other fees” include fees for services rendered by our independent registered public accounting firm with respect to government incentives and
other matters.
Audit Committee’s Pre-Approval Policies and Procedures
The audit committee has adopted a pre-approval policy for the engagement of our independent accountant to perform
certain audit and non-audit services. Pursuant to this policy, which is designed to ensure that such engagements do not impair the
independence of our auditors, the audit committee pre-approves annually a catalog of specific audit and non-audit services in the
categories of audit service, audit-related service and tax services that may be performed by our independent accountants.
All engagements by us of the auditors for 2023 and 2024 were pre-approved by the audit committee.
105
PART IV
ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES
(a)(1) Financial Statements.
The Consolidated Financial Statements filed as part of this annual report are identified in the Index to Consolidated
Financial Statements on page F-1 hereto.
(a)(2) Financial Statement Schedules.
Financial Statement Schedules have been omitted because the information required to be set forth therein is not
applicable or is shown in the financial statements or notes thereto.
(a)(3) Exhibits.
The exhibits listed in the Exhibit Index are filed, furnished, or incorporated by reference in this report.
EXHIBIT INDEX
2.1
Agreement and Plan of Merger, dated as of August 8, 2023, by and among Lifeward, Inc., Atlas Merger Sub, Inc., AlterG Inc. and Shareholder
Representative Services LLC (incorporated by reference to Exhibit 2.1 of the Company’s Current Report on Form 8-K filed with the SEC on
August 9, 2023). +
3.1
Sixth Amended and Restated Articles of Association of the Company (incorporated by reference to Exhibit 3.1 to the Company’s Quarterly
Report on Form 10-Q filed with the SEC on November 12, 2024).
4.1
Specimen share certificate (incorporated by reference to Exhibit 4.1 to the Company’s registration statement on Form F-1/A (File No. 333-
197344), filed with the SEC on August 20, 2014).
4.2
Description of the registrant’s securities registered pursuant to Section 12 of the Securities Exchange Act of 1934 (incorporated by reference to
Exhibit 4.2 to the Company’s Annual Report on Form 10-K filed with the SEC on February 24, 2022).
4.3
Warrant, dated December 30, 2015, between the Company and Kreos Capital V (Expert Fund) Limited (incorporated by reference to Exhibit
10.2 to the Company’s Current Report on Form 8-K filed with the SEC on January 4, 2016).
4.4
First Amendment to Warrant to Purchase Shares between the Company and Kreos Capital V (Expert Fund) Limited, dated November 20, 2018
(incorporated by reference to Exhibit 4.1 to the Company’s Current Report on Form 8-K filed with the SEC on November 21, 2018).
4.5
Form of common warrant from February 2020 best efforts offering (incorporated by reference to Exhibit 4.1 of the Company’s Current Report
on Form 8-K filed with the SEC on February 10, 2020).
4.6
Form of placement agent warrant from February 2020 best efforts offering (incorporated by reference to Exhibit 4.3 of the Company’s Current
Report on Form 8-K filed with the SEC on February 10, 2020).
4.7
Form of purchaser warrant from July 2020 registered direct offering (incorporated by reference to Exhibit 4.1 of the Company’s Current
Report on Form 8-K filed on July 6, 2020).
4.8
Form of placement agent agreement from July 2020 registered direct offering (incorporated by reference to Exhibit 4.2 of the Company’s
Current Report on Form 8-K filed on July 6, 2020).
106
4.9
Form of purchaser warrant from December 2020 private placement (incorporated by reference to Exhibit 4.1 of the Company’s Current Report
on Form 8-K filed with the SEC on December 8, 2020).
4.10
Form of placement agent warrant from December 2020 private placement (incorporated by reference to Exhibit 4.2 of the Company’s Current
Report on Form 8-K filed with the SEC on December 8, 2020).
4.11
Form of purchaser warrant from February 2021 private placement (incorporated by reference to Exhibit 4.1 of the Company’s Current Report
on Form 8-K filed with the SEC on February 25, 2021).
4.12
Form of placement agent warrant from February 2021 private placement (incorporated by reference to Exhibit 4.2 of the Company’s Current
Report on Form 8-K filed with the SEC on February 25, 2021).
4.13
Form of ordinary warrant from September 2021 private placement (incorporated by reference to Exhibit 4.1 of the Company’s Current Report
on Form 8-K filed with the SEC on September 29, 2021).
4.14
Form of placement agent warrant from September 2021 private placement (incorporated by reference to Exhibit 4.2 of the Company’s Current
Report on Form 8-K filed with the SEC on September 29, 2021).
4.15
Form of pre-funded warrant from September 2021 private placement (incorporated by reference to Exhibit 4.3 of the Company’s Current
Report on Form 8-K filed with the SEC on September 29, 2021).
4.16
Form of purchaser warrant from January 2025 registered direct offering and concurrent private placement of warrants (incorporated by
reference to Exhibit 4.1 of the Company’s Current Report on Form 8-K/A filed with the SEC on January 8, 2025).
4.17
Form of placement agent warrant from January 2025 registered direct offering and concurrent private placement of warrants (incorporated by
reference to Exhibit 4.2 of the Company’s Current Report on Form 8-K/A filed with the SEC on January 8, 2025).
10.1
Letter of Agreement, dated July 11, 2013, between the Company and Sanmina Corporation (incorporated by reference to Exhibit 10.1 to the
Company’s Annual Report on Form 10-K filed with the SEC on February 18, 2021).*
10.2
License Agreement, dated May 16, 2016, between the Company and the President and Fellows of Harvard College (incorporated by reference
to Exhibit 10.8 to the Company’s Annual Report on Form 10-K filed with the SEC on February 18, 2021).*
10.3
Form of indemnification agreement between the Company and each of its directors and executive officers (incorporated by reference to Exhibit
10.11 to the Company’s registration statement on Form F-1/A (File No. 333-197344), filed with the SEC on August 20, 2014).**
10.4
2014 Incentive Compensation Plan, as amended (incorporated by reference to Exhibit 99.1 to the Company’s registration statement on Form S-
8 (File No. 333-239258), filed with the SEC on June 18, 2020).**
10.5
Executive Employment Agreement, dated as of January 17, 2011, between the Company and Larry Jasinski (incorporated by reference to
Exhibit 10.16 to the Company’s Annual Report on Form 10-K filed with the SEC on February 29, 2016, as amended on May 6, 2016).**
10.6
Amendment No. 1 to the Executive Employment Agreement, dated as of September 23, 2020, by and between the Company and Larry
Jasinski.**
10.7
2014 Incentive Compensation Plan Form of Option Award Agreement for employees and executives (incorporated by reference to Exhibit
10.18 to the Company’s Annual Report on Form 10-K filed with the SEC on February 29, 2016, as amended on May 6, 2016).**
10.8
2014 Incentive Compensation Plan Form of Restricted Share Unit Award Agreement for non-Israeli employees, and executives (incorporated
by reference to Exhibit 10.19 to the Company’s Annual Report on Form 10-K filed with the SEC on February 29, 2016, as amended on May 6,
2016).**
10.9
2014 Incentive Compensation Plan Form of Restricted Share Unit Award Agreement for Israeli non-employee directors, employees and
executives (incorporated by reference to Exhibit 10.20.1 to the Company’s registration statement on Form S-1 (File No. 333-227852), filed
with the SEC on October 15, 2018).**
10.10
2014 Incentive Compensation Plan Form of Restricted Share Unit Award Agreement between the Company and Jeffrey Dykan, as director
(incorporated by reference to Exhibit 10.20.2 to the Company’s registration statement on Form S-1 (File No. 333-227852), filed with the SEC
on October 15, 2018).**
10.11
2014 Incentive Compensation Plan Prior Form of Restricted Share Unit Award Agreement for non-Israeli non-employee directors
(incorporated by reference to Exhibit 10.20 to the Company’s Annual Report on Form 10-K filed with the SEC on February 29, 2016, as
amended on May 6, 2016).**
10.12
2014 Incentive Compensation Plan New Form of Restricted Share Unit Award Agreement for non-Israeli non-employee directors
(incorporated by reference to Exhibit 10.22 to the Company’s registration statement on Form S-1 (File No. 333-227852), filed with the SEC on
October 15, 2018).**
107
10.13
2014 Incentive Compensation Plan Prior Form of Option Award Agreement for Israeli non-employee directors (incorporated by reference to
Exhibit 10.21 to the Company’s Annual Report on Form 10-K filed with the SEC on February 17, 2017, as amended on April 27, 2017).**
10.14
2014 Incentive Compensation Plan Prior Form of Option Award Agreement for non-Israeli non-employee directors (incorporated by reference
to Exhibit 10.22 to the Company’s Annual Report on Form 10-K filed with the SEC on February 17, 2017, as amended on April 27, 2017).**
10.15
Amendment No. 1 to the Exclusive License Agreement and Amendment No. 2 to the Research Collaboration Agreement, dated April 1, 2018,
between the Company and the President and Fellows of Harvard College (incorporated by reference to Exhibit 10.2 to the Company’s Current
Report on Form 8-K filed with the SEC on June 29, 2018).*
10.16
Employment Agreement, dated July 9, 2021, by and between the Company and Jeannine Lynch (incorporated by reference to Exhibit 10.3 to
the Company’s Quarterly Report on Form 10-Q filed with the SEC on November 10, 2021**.
10.17
Employment Agreement, dated September 2, 2022, by and between the Company and Michael A. Lawless (incorporated by reference to
Exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q filed with the SEC on November 7, 2022).* **
10.18
Consulting Agreement, dated as of January 1, 2023), by and between the Company and Richner Consultants LLC (incorporated by reference to
Appendix A to the Company’s Definitive Proxy Statement on Schedule 14A filed with the SEC on August 9, 2023).**
10.19
Lifeward Ltd. Compensation Policy for Executive Officers and Non-Executive Directors (incorporated by reference to Appendix B to the
Company’s Definitive Proxy Statement on Schedule 14A filed with the SEC on August 9, 2023).**
10.20
Employment Agreement, dated as of August 11, 2023, by and between the Company and Charles Remsberg (incorporated by reference to
Exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q filed with the SEC on November 14, 2023).**
10.21
Form of Restricted Share Unit Award (Inducement Award) for non-Israeli employees and executives (incorporated by reference to Exhibit 10.2
to the Company’s Quarterly Report on Form 10-Q filed with the SEC on November 14, 2023).**
10.22
Employment and Relocation Agreement, dated as of July 17, 2024, by and between the Company and Almog Adar (incorporated by reference
to Exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q filed with the SEC on August 14, 2024).
10.23
Manufacturing Services Agreement, dated as of October 3, 2024, by and between the Company and Cirtronics Corporation. *
19.1
Insider Trading Policy.***
21.1
List of subsidiaries of the Company (incorporated by reference to Exhibit 21.1 to the Company’s Annual Report on Form 10-K filed with the
SEC on February 27, 2024).
23.1
Consent of Kost Forer Gabbay & Kasierer, a member of Ernst &Young Global, Independent Registered Public Accounting Firm.
31.1
Certification of Principal Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act 2002.***
31.2
Certification of Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act 2002.***
32.1
Certification of Principal Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act 2002.***
32.2
Certification of Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act 2002.***
108
97.1
Compensation Recovery Policy (incorporated by reference to Annex A to the Lifeward Ltd. Compensation Policy for Executive Officers and
Non-Executive Directors filed herewith as Exhibit 10.18).
101.INS
XBRL Instance Document.
101.SCH
XBRL Taxonomy Extension Schema Document.
101.PRE
XBRL Taxonomy Presentation Linkbase Document.
101.CAL
XBRL Taxonomy Calculation Linkbase Document.
101.LAB
XBRL Taxonomy Label Linkbase Document.
101.DEF
XBRL Taxonomy Extension Definition Linkbase Document.
+
Schedules have been omitted pursuant to Item 601(b)(2) of Regulation S-K.
*
Certain identified information in the exhibit has been omitted because it is the type of information that (i) the Company customarily and actually
treats as private and confidential, and (ii) is not material.
**
Management contract or compensatory plan, contract or arrangement.
***
Furnished herewith.
ITEM 16. FORM 10-K SUMMARY
Not applicable.
109
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused
this report to be signed on its behalf by the undersigned, thereunto duly authorized.
Lifeward Ltd.
By:
/s/ Larry Jasinski
Name: Larry Jasinski
Title: Chief Executive Officer
Date: March 7, 2025
110
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENT: That the undersigned officers and directors of Lifeward Ltd. do hereby
constitute and appoint Larry Jasinski and Mike Lawless the lawful attorney and agent with power and authority to do any and all
acts and things and to execute any and all instruments which said attorney and agent determines may be necessary or advisable or
required to enable Lifeward Ltd. to comply with the Securities and Exchange Act of 1934, as amended, and any rules or
regulations or requirements of the Securities and Exchange Commission in connection with this report. Without limiting the
generality of the foregoing power and authority, the powers granted include the power and authority to sign the names of the
undersigned officers and directors in the capacities indicated below to this report or amendments or supplements thereto, and
each of the undersigned hereby ratifies and confirms all that said attorneys and agents, or either of them, shall do or cause to be
done by virtue hereof. This Power of Attorney may be signed in several counterparts.
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed by the following persons
on behalf of the registrant and in the capacities and on the dates indicated.
Signature
Title
Date
/s/ Larry Jasinski
Director and Chief Executive Officer
March 7, 2025
Larry Jasinski
(Principal Executive Officer)
/s/ Mike Lawless
Chief Financial Officer
March 7, 2025
Mike Lawless
(Principal Financial Officer)
/s/ Almog Adar
Vice President of Finance
March 7, 2025
Almog Adar
(Principal Accounting Officer)
/s/ Joseph Turk
Chairman of the Board
March 7, 2025
Joseph Turk
/s/ Dr. John William Poduska
Director
March 7, 2025
Dr. John William Poduska
/s/ Randel Richner
Director
March 7, 2025
Randel Richner
/s/ Hadar Levy
Director
March 7, 2025
Hadar Levy
/s/ Michael Swinford
Director
March 7, 2025
Michael Swinford
/s/ Robert Marshall
Director
March 7, 2025
Robert Marshall
111
PART IV
LIFEWARD LTD
CONSOLIDATED FINANCIAL STATEMENTS
U.S. DOLLARS IN THOUSANDS
INDEX
Page
Report of Independent Registered Public Accounting Firm
F - 2
(PCAOB ID: 1281)
Consolidated Balance Sheets
F - 4
Consolidated Statements of Operations
F - 6
Statements of Changes in Shareholders’ Equity
F - 7
Consolidated Statements of Cash Flows
F - 8
Notes to Consolidated Financial Statements
F - 10
Kost Forer Gabbay & Kasierer
Menachem Begin 144,
Tel-Aviv 6492102, Israel
Tel: +972-3-6232525
Fax: +972-2-5622555
ey.com
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Shareholders and the Board of Directors of
LIFEWARD LTD.
Opinion on the Financial Statements
We have audited the accompanying consolidated balance sheets of Lifeward Ltd. and subsidiaries (the Company) as of December 31, 2024 and 2023, the
related consolidated statements of operations, changes is shareholders’ equity and cash flows for each of the three years in the period ended December 31,
2024, and the related notes (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present
fairly, in all material respects, the financial position of the Company at December 31, 2024 and 2023, and the results of its operations and its cash flows for
each of the three years in the period ended December 31, 2024, in conformity with U.S. generally accepted accounting principles.
The Company's Ability to Continue as a Going Concern
The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in
Note 1e to the financial statements, the Company has suffered recurring losses from operations, has negative cash flows from operating activities, and has
stated that substantial doubt exists about the Company’s ability to continue as a going concern. Management's evaluation of the events and conditions and
management’s plans regarding these matters are also described in Note 1e. The consolidated financial statements do not include any adjustments that might
result from the outcome of this uncertainty.
Basis for Opinion
These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial
statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States)
(PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and
regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor
were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits we are required to obtain an understanding of
internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over
financial reporting. Accordingly, we express no such opinion.
Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and
performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in
the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as
evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.
Critical Audit Matters
The critical audit matters communicated below are matters arising from the current period audit of the financial statements that were communicated or
required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the financial statements and (2)
involved our especially challenging, subjective, or complex judgments. The communication of the critical audit matters does not alter in any way our
opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate
opinions on the critical audit matters or on the accounts or disclosures to which they relate.
F - 2
Revenue recognition
Description of the Matter As described in Note 2 of the consolidated financial statements, the Company recognizes revenues from the SCI products at a
point in time based on the consideration to which the company is entitled to in exchange for sales of its SCI products, and
includes variable consideration.
The Company estimates the amount of variable consideration that is included in the transaction price mainly by estimating claims
reimbursement by the Centers for Medicare & Medicaid Services (CMS), which is based primarily on actual historical collection
experience from CMS. For the year ended December 31, 2024, revenues were $3.2 million.
Auditing management's determination of the variable consideration was complex and judgmental due to significant data inputs
and subjective assumptions utilized in the process. In determining the variable consideration, management develops estimates
based on actual historical collection experience by CMS.
How We Addressed the
Matter in Our Audit
To test the estimate of variable consideration, our audit procedures included, evaluating the methodology used and testing the
underlying data used by management in its analysis, performing independent recalculation of management's estimate and
evaluating the historical accuracy by comparing such estimates to subsequent actual results. We assessed the historical accuracy
of management’s estimate and performed sensitivity analyses to evaluate the changes in variable consideration that would result
from changes in the expected collection rates used and the corresponding effect on revenues.
We also evaluated the disclosures included in the notes to the consolidated financial statements.
Impairment Assessment of Long-Lived Assets (Assets group)
Description of the Matter As discussed in note 2 to the consolidated financial statements, long-lived assets are assessed for recoverability whenever events
or changes in circumstances indicate that the carrying amount of the assets may not be recoverable. Recoverability of the Long-
lived assets (assets group) is measured by a comparison of the undiscounted future cash flows the Long-lived assets (assets
group) is expected to generate to the carrying amounts of the assets group. If such evaluation indicates that the carrying amount
of the long-lived assets (assets group) is not recoverable, an impairment loss is calculated based on the excess of the carrying
amount of the long- lived assets (assets group) over its fair value. The company identified triggering event and performed an
impairment assessment with respect to LCAI assets group. For the year ended December 31, 2024, as a result of the assessment,
the Company’s recorded an impairment charge of $9.8 Million.
Auditing management’s estimation of the fair value of the long-lived assets (assets group) of LCAI was complex and highly
judgmental due to the significant measurement uncertainty in determining the fair value of the long-lived assets. In particular, the
fair value estimates were sensitive to significant assumptions such as discount rate and forecasted revenues, which are affected by
expectations about future market or economic conditions.
How We Addressed the
Matter in Our Audit
To test the management's estimation of the fair value of the long-lived assets (assets group) of LCAI, we performed audit
procedures that included, assessing the fair value methodologies utilized by management and the significant assumptions,
including the completeness and accuracy of the underlying data used in the analyses. we compared the significant assumptions to
current financial and operating plans, market and industry studies and historical trends. We also assessed the historical accuracy
of management’s forecasts and performed sensitivity analyses of significant assumptions to evaluate the changes in the fair value
estimates of the long-lived assets that would result from changes in the assumptions. We involved our valuation specialists in
evaluating the discount rate and valuation methodology used by the Company.
KOST FORER GABBAY & KASIERER
A Member of EY Global
We have served as the Company’s auditor since 2014.
Tel-Aviv, Israel
March 7, 2025
F - 3
LIFEWARD LTD. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
U.S. dollars in thousands
December 31,
2024
2023
ASSETS
CURRENT ASSETS:
Cash and cash equivalents
$
6,746 $
28,083
Restricted cash
197
-
Trade receivables, net of credit losses of $160 and $328, respectively
6,004
3,120
Prepaid expenses and other current assets
1,624
2,366
Inventories
6,723
5,653
Total current assets
21,294
39,222
LONG-TERM ASSETS
Restricted cash and other long-term assets
240
784
Operating lease right-of-use assets
548
1,861
Property and equipment, net
867
1,262
Intangible assets, net
‐
12,525
Goodwill
7,538
7,538
Total long-term assets
9,193
23,970
Total assets
$
30,487 $
63,192
The accompanying notes are an integral part of these consolidated financial statements.
F - 4
LIFEWARD LTD. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
U.S. dollars in thousands (except share and per share data)
December 31,
2024
2023
LIABILITIES AND SHAREHOLDERS’ EQUITY
CURRENT LIABILITIES:
Trade payables
$
5,022 $
5,069
Employees and payroll accruals
1,332
2,034
Deferred revenue
1,248
1,504
Current maturities of operating leases liability
858
1,296
Earnout liability
608
576
Other current liabilities
1,157
1,316
Total current liabilities
10,225
11,795
LONG-TERM LIABILITIES
Earnout liability
‐
2,716
Deferred revenues
1,324
1,506
Non-current operating leases liability
22
607
Other long-term liabilities
67
58
Total long-term liabilities
1,413
4,887
Total liabilities
11,638
16,682
COMMITMENTS AND CONTINGENT LIABILITIES
Shareholders’ equity:
Ordinary share of NIS 1.75 par value-Authorized: 25,000,000 shares at December 31, 2024 and 17,142,857 at
December 31, 2023; Issued: 9,382,801 and 9,161,798 shares at December 31, 2024 and December 31, 2023,
respectively; Outstanding: 8,808,143 and 8,587,140 shares as of December 31, 2024 and December 31, 2023
respectively (1)
4,590
4,487
Additional paid-in capital
282,287
281,109
Treasury Shares at cost, 574,658 ordinary shares at December 31, 2024 and December 31, 2023
(3,203)
(3,203)
Accumulated deficit
(264,825)
(235,883)
Total shareholders’ equity
18,849
46,510
Total liabilities and shareholders’ equity
$
30,487 $
63,192
The accompanying notes are an integral part of these consolidated financial statements.
(1) Reflects one-for-seven reverse share split that became effective on March 15, 2024. See Note 9a to the consolidated financial statements.
F - 5
LIFEWARD LTD. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
U.S. dollars in thousands (except share and per share data)
Year ended December 31,
2024
2023
2022
Revenue
$
25,663 $
13,854 $
5,511
Cost of revenue
17,447
9,401
3,606
Gross profit
8,216
4,453
1,905
Operating expenses:
Research and development, net
4,625
4,148
4,031
Sales and marketing
17,949
13,922
9,842
General and administrative
5,195
9,995
7,134
Impairment charges
9,794
-
-
Total operating expenses
37,563
28,065
21,007
Operating loss
(29,347)
(23,612)
(19,102)
Financial income, net
448
1,467
*)
Loss before income taxes
(28,899)
(22,145)
(19,102)
Taxes on income (benefit)
43
(12)
467
Net loss
$
(28,942) $
(22,133) $
(19,569)
Net loss per ordinary share, basic and diluted
$
(3.33) $
(2.59) $
(2.20)
Weighted average number of shares used in computing net loss per ordinary share, basic and
diluted (1)
8,691,271
8,531,294
8,911,256
The accompanying notes are an integral part of these consolidated financial statements.
*) Represents an amount lower than $1.
(1) Reflects one-for-seven reverse share split that became effective on March 15, 2024. See Note 9a to the consolidated financial
statements.
F - 6
LIFEWARD LTD. AND SUBSIDIARIES
STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY
U.S. dollars in thousands (except share data)
Ordinary Share
Additional
paid-in
Treasury
Accumulated
Total
shareholders’
Number (1)
Amount
capital
Shares
deficit
equity
Balance as of December 31, 2021
8,925,722
4,661
278,903
‐
(194,181)
89,383
Share-based compensation to employees
and non-employees
‐
‐
993
‐
‐
993
Issuance of ordinary shares upon vesting of
RSUs by employees and non-employees
77,620
39
(39)
‐
‐
‐
Treasury shares at cost
(419,029)
(211)
‐
(2,431)
‐
(2,642)
Net loss
‐
‐
‐
‐
(19,569)
(19,569)
Balance as of December 31, 2022
8,584,313 $
4,489 $
279,857 $
(2,431) $
(213,750) $
68,165
Share-based compensation to employees
and non-employees
‐
‐
1,328
‐
‐
1,328
Issuance of ordinary shares upon vesting of
RSUs by employees and non-employees
158,456
76
(76)
‐
‐
‐
Treasury shares at cost
(155,629)
(78)
‐
(772)
‐
(850)
Net loss
‐
‐
‐
‐
(22,133)
(22,133)
Balance as of December 31, 2023
8,587,140
4,487
281,109
(3,203)
(235,883)
46,510
Share-based compensation to employees
and non-employees
‐
‐
1,281
‐
‐
1,281
Issuance of ordinary shares upon vesting of
RSUs by employees and non-employees
221,003
103
(103)
‐
‐
‐
Net loss
‐
‐
‐
‐
(28,942)
(28,942)
Balance as of December 31, 2024
8,808,143
4,590
282,287
(3,203)
(264,825)
18,849
(1) Reflects one-for-seven reverse share split that became effective on March 15, 2024. See Note 9a to the consolidated financial statements.
The accompanying notes are an integral part of these consolidated financial statements.
F - 7
LIFEWARD LTD. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
U.S. dollars in thousands
Year ended December 31,
2024
2023
2022
Cash flows used in operating activities:
Net loss
$
(28,942) $
(22,133) $
(19,569)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation
494
239
202
Amortization of intangible assets
3,347
1,608
-
Impairment of intangible and tangible assets
9,794
-
-
Share-based compensation
1,281
1,328
993
Deferred taxes
-
-
316
Remeasurement of earnout liability
(2,684)
(315)
-
Interest income
-
(11)
-
Exchange rate fluctuations
(34)
(45)
79
Changes in assets and liabilities:
Trade receivables, net
(2,884)
(311)
(408)
Prepaid expenses, operating lease right-of-use assets and other assets
1,383
(531)
94
Inventories
(920)
(277)
(117)
Trade payables
(47)
1,037
566
Employees and payroll accruals
(702)
(14)
140
Deferred revenues
(438)
(269)
(34)
Operating lease liabilities and other liabilities
(1,366)
(973)
(153)
Net cash used in operating activities
(21,718)
(20,667)
(17,891)
Cash flows used in investing activities:
Acquisition of a business, net of cash acquired
-
(18,068)
-
Purchase of property and equipment
-
(81)
(25)
Net cash used in investing activities
-
(18,149)
(25)
Cash flows used in financing activities:
Purchase of treasury shares
-
(992)
(2,500)
Net cash used in financing activities
-
(992)
(2,500)
Effect of Exchange rate changes on Cash, Cash Equivalents and Restricted Cash
34
45
(79)
Decrease in cash, cash equivalents, and restricted cash
(21,684)
(39,763)
(20,495)
Cash, cash equivalents, and restricted cash at beginning of period
28,792
68,555
89,050
Cash, cash equivalents, and restricted cash at end of period
$
7,108 $
28,792 $
68,555
The accompanying notes are an integral part of these consolidated financial statements.
F - 8
LIFEWARD LTD. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
U.S. dollars in thousands
Year ended December 31,
2024
2023
2022
Supplemental disclosures of non-cash flow information
Classification of inventory to property and equipment, net
$
404 $
481 $
67
Amounts related to shares re-purchase not yet paid
$
- $
- $
142
ROU assets obtained from lease liabilities
$
193 $
513 $
-
Supplemental disclosures of cash flow information:
Cash paid (received) for income taxes
$
(7) $
126 $
113
Cash received from interest
$
654 $
1,341
-
Reconciliation of cash, cash equivalents and restricted cash as shown in the consolidated
statements of cash flows
Cash and cash equivalents
$
6,746 $
28,083 $
67,896
Restricted cash included in other long-term assets
$
362 $
709 $
659
Total Cash, cash equivalents, and restricted cash
$
7,108 $
28,792 $
68,555
The accompanying notes are an integral part of these consolidated financial statements.
F - 9
LIFEWARD LTD. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
U.S. dollars in thousands
NOTE 1:- GENERAL
a.
Lifeward Ltd. (“LL,” and together with its subsidiaries, the “Company”) was originally incorporated under the laws of the State of Israel on June
20, 2001, and commenced operations on the same date under the name Argo Medical Technologies Ltd. This name was later changed to ReWalk
Robotics Ltd. on June 18, 2014. On January 29, 2024, the Company announced that it had rebranded as Lifeward, with each subsidiary of LL
renamed to reflect the new corporate identity. The Company officially changed its name to Lifeward Ltd. on September 10, 2024.
b.
LL has three wholly owned (directly and indirectly) subsidiaries: (i) Lifeward Inc. (“LI”) originally incorporated under the laws of Delaware on
February 15, 2012 under the name of ReWalk Robotics, Inc., (ii) Lifeward GMBH (“LG”) originally incorporated under the laws of Germany on
January 14, 2013 under the name of ReWalk Robotics GMBH, and (iii) Lifeward CA, Inc. ( “LCAI”) originally incorporated in Delaware on
October 21, 2004 under the name of Gravus, Inc., which was later changed to AlterG, Inc. on June 30, 2005.
c.
The Company is a medical device company that designs, develops, and commercializes life-changing solutions that span the continuum of care in
physical rehabilitation and recovery, delivering proven functional and health benefits in clinical settings as well as in the home and community.
The Company’s initial product offerings were the ReWalk Personal and ReWalk Rehabilitation Exoskeleton devices for individuals with spinal
cord injury (collectively, the “SCI Products”). These devices are robotic exoskeletons that are designed for individuals with paraplegia that use the
Company’s patented tilt-sensor technology and an on-board computer and motion sensors to drive motorized legs that power movement. These
SCI Products allow individuals with spinal cord injury the ability to stand and walk again during everyday activities at home or in the community.
The Company has sought to expand its product offerings beyond the SCI Products through internal development and distribution agreements. The
Company has developed its ReStore Exo-Suit device (the “ReStore”), which it began commercializing in June 2019. The ReStore is a powered,
lightweight soft exo-suit intended for use during the rehabilitation of individuals with lower limb disabilities due to stroke. In the second quarter of
2020, the Company signed an agreement to distribute product lines in the United States, one of which we later discontinued. The Company is the
exclusive distributor of the MYOLYN MyoCycle FES Pro cycles to U.S. rehabilitation clinics and for the MyoCycle Home cycles available to
U.S. veterans through the Veterans Health Administration (“VHA”) hospitals.
The Company made its first acquisition to supplement its internal growth when it acquired AlterG, Inc., a leading provider of anti-gravity systems
for use in physical and neurological rehabilitation. The Company paid a cash purchase price of approximately $19 million at closing and
additional cash earnouts may be paid based upon a percentage of AlterG’s revenue growth over the two years following the closing. The AlterG
anti-gravity systems use patented, NASA-derived Differential Air Pressure (“DAP”) technology to reduce the effects of gravity and allow people
to rehabilitate with finely calibrated support and reduced pain. The Company will continue to evaluate other products for distribution or
acquisition that can broaden its product offerings further to help individuals with neurological injury and disability.
On August 11, 2023, pursuant to an Agreement and Plan of Merger among LI, AlterG, Inc., Atlas Merger Sub, Inc., a wholly owned subsidiary of
AlterG, Inc. (“Merger Sub”), and Shareholder Representative Services LLC, dated August 8, 2023, LI acquired AlterG, Inc. and AlterG, Inc.
became a wholly owned subsidiary of the Company. With the rebranding of the Company, AlterG, Inc. was renamed as LCAI.
For accounting purposes, LI was considered the acquirer and AlterG, Inc. was considered the acquiree. The acquisition was accounted for using
the acquisition method of accounting. See Note 5 for additional information.
F - 10
The Company markets and sells its products directly to institutions and individuals and through third-party distributors. The Company sells its
products directly primarily in the United States and Germany, through a combination (depending on the product line) of direct sales and
distributors in Germany, Canada, and Australia, and primarily through distributors in other markets. In its direct markets, the Company has
established relationships with clinics and rehabilitation centers, professional and college sports teams, and individuals and organizations in the
spinal cord injury community, and in its indirect markets, the Company’s distributors maintain these relationships.
d.
The Company depends on one contract manufacturer to manufacture the ReWalk and the ReStore products in its portfolio, Sanmina. Reliance on
this vendor makes the Company vulnerable to possible capacity constraints and reduces control over component availability, delivery schedules,
manufacturing yields and costs. Starting in January 2025, the Company signed a contract with Cirtronics’ Corporation to manufacture and
assembly of our AlterG products.
e.
The Company has incurred losses since inception and expects to continue to incur losses for the foreseeable future. The Company’s accumulated
deficit as of December 31, 2024 was $264.8 million and negative cash flows from operating activities during the year ended December 31, 2024
was $21.7 million. The Company’s cash and cash equivalent on December 31, 2024 totalled $6.7 million. As of December 31, 2024, the
Company’s cash and cash equivalents position is not sufficient to fund the Company’s planned operations for at least a year beyond the date of the
filing date of the consolidated financial statements. Those factors raise substantial doubt about the Company’s ability to continue as a going
concern. The ability to continue as a going concern is dependent upon the Company obtaining the necessary financing to meet its obligations and
repay its liabilities arising from normal business operations when they become due.
The current cash balance, historical trend of cash used in operations and lack of certainty regarding a future capital raise, raises substantial doubt
about our ability to continue as a going concern for the next twelve months from the date of issuance of these financial statements. The inability to
borrow or raise sufficient funds on commercially reasonable terms, would have serious consequences on our financial condition and results of
operations.
The accompanying consolidated financial statements have been prepared assuming the Company will continue as a going concern, which
contemplates the realization of assets and liabilities and commitments in the normal course of business.
The consolidated financial statements for the year ended December 31, 2024 do not include any adjustments to reflect the possible future effects
on the recoverability and classification of assets or the amounts and classification of liabilities that may result from uncertainty related to the
Company’s ability to continue as a going concern.
NOTE 2:- SIGNIFICANT ACCOUNTING POLICIES
The consolidated financial statements are prepared in accordance with accounting principles generally accepted in the United States (“U.S.
GAAP”), applied on a consistent basis, as follows:
a.
Use of Estimates
The preparation of the consolidated financial statements in conformity with U.S. GAAP requires management to make estimates, judgments, and
assumptions. The Company’s management believes that the estimates, judgments, and assumptions used are reasonable based upon information
available at the time they are made. These estimates, judgments, and assumptions can affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the dates of the financial statements, and the reported amounts of revenue and expenses during the
reporting period. Actual results could differ from those estimates. On an ongoing basis, the Company’s management evaluates estimates, including
those related to inventories, fair values of share-based awards, contingent liabilities, provision for warrant and allowance for credit losses. Such
estimates are based on historical experience and on various other assumptions that are believed to be reasonable, the results of which form the
basis for making judgments about the carrying values of assets and liabilities.
F - 11
b.
Financial Statements in U.S. Dollars:
The functional currency is the currency that best reflects the economic environment in which the Company and its subsidiaries operate and
conduct their transactions. Most of the Company’s revenues and costs are incurred in U.S. dollar. In addition, the Company’s financing activities
are incurred in U.S. dollars. The Company’s management believes that the dollar is the primary currency of the economic environment in which
the Company and each of its subsidiaries operate. Thus, the dollar is the Company’s and its subsidiary's functional and reporting currency.
Accordingly, monetary accounts maintained in currencies other than the U.S. dollar are remeasured into U.S. dollars in accordance with ASC 830
“Foreign Currency Matters.” All transaction gains and losses of the remeasured monetary balance sheet items are reflected in the consolidated
statements of operations as financing income or expenses as appropriate.
c.
Principles of Consolidation:
The consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries. Intercompany balances have been
eliminated upon consolidation.
d.
Cash Equivalents:
Cash equivalents are short-term highly liquid investments that are readily convertible to cash with original maturities of three months or less, at
the date acquired.
e.
Inventories:
Inventories are stated at the lower of cost or net realizable value. Net realizable value is the estimated selling prices in the ordinary course of
business, less reasonably predictable costs of completion, disposal, and transportation. Inventory write-offs are provided to cover risks arising
from slow-moving items or technological obsolescence.
The Company periodically evaluates the ability to realize the value of inventory based on a combination of factors, including the quantities on
hand relative to historical, current, and projected sales volume. Purchasing requirements and alternative usage are explored within these processes
to mitigate inventory exposure. Based on this evaluation, an impairment charge is recorded when required to write-down inventory to its net
realized value. Any write-off is recognized in the consolidated statements of operations as cost of revenues.
Cost is determined as follows:
Finished products - based on raw materials and manufacturing costs on an average basis.
Raw materials - The weighted average cost method.
f.
Property and Equipment:
Property and equipment are stated at cost, net of accumulated depreciation. Depreciation is calculated using the straight-line method over the
estimated useful lives of the assets at the following annual rates:
Percentage of Original
Cost
Computer equipment
20-33% (mainly 33)
Office furniture and equipment
6 – 10% (mainly 10)
Machinery and laboratory equipment
15%
Field service units
20-50%
Leasehold improvements
Over the shorter of the
lease term or estimated
useful life
g.
Business Combinations
The Company accounts for business combinations in accordance with ASC 805, “Business Combinations” (“ASC 805”). For business
combinations accounted for under the acquisition method, ASC 805 requires recognition of assets acquired, liabilities assumed, and any non-
controlling interest at the acquisition date, measured at their fair values as of that date. The Company determines the recognition of intangible
assets based on the following criteria: (i) the intangible asset arises from contractual or other rights; or (ii) the intangible asset is separable or
divisible from the acquired entity and capable of being sold, transferred, licensed, returned or exchanged.
F - 12
The excess of the fair value of the purchase price over the fair values of the identifiable assets and liabilities is recorded as goodwill. Determining
the fair value of the identifiable assets and liabilities requires management to use significant judgment and estimates including the forecasted
revenue and revenues growth rates, discount rates, customer contract renewal rates and customer attrition rates. The process of estimating the fair
values requires significant estimates, especially with respect to intangible assets. Management’s determination of fair value of assets acquired and
liabilities assumed at the acquisition date is based on the best information available in the circumstances and incorporates management’s own
assumptions and involves a significant degree of judgment.
Acquisition related costs include legal fees, consulting and success fees, and other non-recurring integration related costs. Acquisition-related
costs are expensed as incurred.
h.
Goodwill and Other Intangibles
For business combinations, the purchase prices are allocated to the tangible assets and intangible assets acquired and liabilities assumed based on
their estimated fair values on the acquisition dates, with the remaining unallocated purchase prices recorded as goodwill.
The Company has no indefinite-lived intangible assets other than goodwill. Acquired identifiable finite-lived intangible assets include identifiable
acquired technology, customer relationships, trademarks and backlog and are amortized on a straight-line basis over the estimated useful lives of
the assets. The Company routinely reviews the remaining estimated useful lives of finite-lived intangible assets.
Goodwill is not amortized and is tested for impairment at least annually.
The Company operates as one reporting unit and the fair value of the reporting unit is estimated using quoted market prices of the Company’s
stock in active markets. The Company tests goodwill for impairment annually in the fourth quarter and whenever events or changes in
circumstances indicate the carrying amount of goodwill may not be recoverable.
When testing goodwill for impairment, the Company may first perform a qualitative assessment. If the Company determines it is not more likely
than not the reporting unit’s fair value is less than its carrying value, then no further analysis is necessary. If the Company determines that it is
more likely than not that the fair value of its reporting unit is less than its carrying amount, then the quantitative impairment test will be
performed. The Company may elect to bypass the qualitative assessment and proceed directly to performing a quantitative analysis. Under the
quantitative impairment test, if the carrying amount of the Company’s reporting unit exceeds its fair value, the Company recognizes an impairment
of goodwill for the amount of this excess.
As of December 31, 2024 and 2023, no impairments of goodwill have been recognized.
i.
Impairment of Long-Lived Assets
The Company’s long-lived assets, including right-of-use (“ROU”) assets and identifiable intangible assets that are subject to amortization, are
reviewed for impairment in accordance with ASC 360, “Property, Plant and Equipment” whenever events or changes in circumstances indicate
that the carrying amount of an asset (or asset group) may not be recoverable. Recoverability of assets (or asset group) to be held and used is
measured by a comparison of the carrying amount of an asset to the future undiscounted cash flows expected to be generated by the assets. If such
assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the assets
exceeds the fair value of the assets.
In 2024, an impairment loss of $9.8 million was recorded. During the years ended December 31, 2023 and 2022, no impairment losses have been
recorded.
j.
Restricted cash and Other long-term assets:
Other long-term assets include long-term prepaid expenses and restricted cash deposits for offices and cars leasing based upon the term of the
remaining restrictions.
F - 13
k.
Treasury shares
The Company repurchased its ordinary shares and holds them as treasury shares. The Company presents the cost to repurchase treasury shares as a
reduction of shareholders’ equity.
l.
Revenue Recognition:
The Company generates revenues from sales of products. The Company sells its products directly to end customers and through distributors. The
Company sells its products to clinics and rehabilitation centres, professional and college sports teams, private individuals (who finance the
purchases by themselves, through fundraising or reimbursement coverage from insurance companies), and distributors.
The Company recognizes revenue in accordance with ASC 606, “Revenue Recognition” when, or as, control of the promised good or service is
transferred to the customer, in an amount that reflects the consideration the Company expects to be entitled to in exchange for those goods or
services. The Company applies the following five steps:
1.
Identify the contract with a customer
The Company generally considers a purchase order or a signed quote to be a contract with a customer. In evaluating the contract with a
customer, the Company analyses the customer’s intent and ability to pay the amount of promised consideration (credit risk) and considers the
probability of collecting substantially all of the consideration.
2.
Identify the performance obligations in the contract
At a contract’s inception, the Company assesses the goods or services promised in a contract with a customer and identifies the performance
obligations.
3.
Determine the transaction price
The transaction price is determined based on the consideration to which the Company will be entitled in exchange for transferring products or
services to the customer. Determining the transaction price requires of level judgment, which is discussed by revenue category in further
detail below.
The Company does not offer extended payment terms beyond one year to customers and has chosen to apply the practical expedient, opting
not to evaluate payment terms of one year or less for the existence of a significant financing component.
4.
Allocate the transaction price to performance obligations in the contract
If the contract contains a single performance obligation, the entire transaction price is allocated to the single performance obligation.
Contracts that contain multiple performance obligations require an allocation of the transaction price to each performance obligation based on
a relative standalone selling price basis.
5.
Recognize revenue when or as the Company satisfies a performance obligation
Revenue is recognized when or as performance obligations are satisfied by transferring control of a promised good or service to a customer.
Control either transfers over time or at a point in time, which affects when revenue is recorded.
The Company has elected to apply the practical expedient for financing component for transactions in which the difference between the
payment date and the revenue recognition timing is up to 12 months.
Disaggregation of Revenue (in thousands):
Year Ended December 31,
2024
2023
2022
Product
$
19,920 $
10,681 $
4,175
Rental
2,557
1,033
859
Service and warranty
3,186
2,140
477
Total Revenues
$
25,663 $
13,854 $
5,511
F - 14
Product revenue
Revenue from Products is comprised of sale of Anti-Gravity products, sale of systems products to rehabilitation facilities and sale of ReWalk
Personal Exoskeleton systems to end users. Revenues generated from the sale of Products are recognized at a point in time, once the customer has
obtained the legal title to the items purchased.
For systems sold to rehabilitation facilities, the Company includes insignificant training and considers the elements in the arrangement to be a
single performance obligation. Therefore, the Company recognizes revenue for the system only when control is transferred after delivery and
when the training has been completed, in accordance with the agreements terms with the customer.
For sales of ReWalk Personal Exoskeleton systems to end users, and for sales of ReWalk Personal or ReWalk Rehabilitation Exoskeleton systems
to third party distributors, the Company does not provide training to the end user as this training is completed by the rehabilitation center or by the
distributor that have previously completed the ReWalk Training program. Therefore, the Company recognizes revenue in such sales upon delivery.
Payment terms between the Company and its payors typically range between 30 to 45 days, depending on the type of payer, country of sale, and
the products or services offered. However, for CMS, payments may take up to twelve months.
The Company generally does not grant a right of return for its products. In rare circumstances when the Company provides a right of return for its
products, the Company records reductions to revenue for expected future product returns based on the Company’s historical experience and
estimates.
During 2024, the Company offered five products: (1) ReWalk Personal Exoskeletons, (2) ReWalk Rehabilitation Exoskeleton, (3) ReStore, (4)
AlterG Anti-Gravity systems, (5) MyoCycle.
ReWalk Personal and ReWalk Rehabilitation are SCI Products, which are currently designed for everyday use by paraplegic individuals at home
and in their communities. SCI Products are custom fitted for each user, as well as for use by paraplegic patients in the clinical rehabilitation
environment, where they provide individuals access to valuable exercise and therapy. ReWalk Rehabilitation is a ReWalk Personal product sold
with multiple sizes of our adjustable parts to allow different users the ability to train within a clinic.
With the recent establishment of a Medicare reimbursement pathway for the ReWalk product, the Company includes variable consideration when,
in the Company’s judgment, it is probable that a significant future reversal of cumulative revenue under the contract will not occur. The Company
reassesses variable consideration at each reporting period and, if necessary, these estimates are adjusted to reflect the anticipated amounts to be
collected when those facts and circumstances become known.
The AlterG Anti-Gravity systems are used in physical and neurological rehabilitation and athletic training, both domestically and internationally.
This transformative technology uses patented, NASA-derived DAP technology to reduce the effects of gravity and allow people to move with
finely calibrated support and reduced pain.
The ReStore is a powered, lightweight soft exo-suit intended for use in the rehabilitation of individuals with lower limb disability due to stroke in
the clinical rehabilitation environment.
The Company also sells the MyoCycle, which uses Functional Electrical Stimulation (“FES”) technology, in the United States for use at home or
in clinic.
Rental revenue
Rental revenue for the AlterG Anti-Gravity systems is accounted for under ASC Topic 842, Leases. The Company rents its products to customers
for a fixed monthly fee over the rental term, which typically ranges from 2 to 3 years. Rental revenues are recorded as earned on a monthly basis.
See Note 2x for additional information.
F - 15
For the SCI Products, the Company also offers a rent-to-purchase model in which the Company recognizes revenue ratably according to the
agreed rental monthly fee for a limited period prior to selling its products.
Service and warranties
The Company services its products after expiration of the initial warranty. Service revenue, consisting of time and materials to perform the repairs,
is recorded as services are rendered, as the customers consume the benefits over the service term.
Warranties are classified as either an assurance type or a service type warranty. A warranty is considered an assurance type warranty if it provides
the customer with assurance that the product will function as intended for a limited period of time. An assurance type warranty is not accounted
for as a separate performance obligation under the revenue model.
SCI Products generally include a five -year warranty. The first two years are considered as an assurance type warranty and the additional period is
considered an extended service arrangement, which is a service type warranty. A service type warranty is either sold with a unit or separately for a
unit for which the warranty has expired. A service type warranty is accounted as a separate performance obligation and revenue is recognized
ratably over the life of the warranty as the customer consume the benefit over the service term.
With the recent establishment of a Medicare reimbursement pathway, the Company offers its SCI Products to qualified Medicare beneficiaries
with a two-year assurance type warranty, consistent with the coverage decision by CMS.
For AlterG Anti-Gravity Products, the Company offers customers extended warranty contracts that extend or enhance the technical support, parts,
and labor coverage offered as part of the base warranty included with the Anti-Gravity system products. Extended warranty revenue is recognized
ratably over the extended warranty coverage period. The Company offers a one-year assurance type warranty to customers in the U.S. and two
years assurance type warranty for spare parts only to its international distributors. For these products, the Company determines standalone selling
price based on the price at which the performance obligation is sold separately.
The ReStore device is sold with a two-year warranty which is considered as assurance type warranty.
The MyoCycle FES cycles are sold with assurance type warranty offered by the manufacturer, MYOLYN, ranging between three years to ten
years, depending on the specific product and part.
Contract balances (in thousands):
December
31,
December
31,
2024
2023
Trade receivable, net of credit losses (1)
$
6,004 $
3,120
Deferred revenues (1) (2)
$
2,572 $
3,010
(1)
Balance presented net of unrecognized revenue that was not yet collected.
(2)
$1.7 million of the December 31, 2023 deferred revenue balance was recognized as revenue during the year ended December 31, 2024.
Accounts Receivable — Billed — Billed accounts receivables include all outstanding invoices to customers, as well as amounts allowed to be
billed according to contractual billing terms with customers.
Accounts Receivable — Unbilled — Unbilled accounts receivables are recorded when revenue recognition criteria is met prior to contractual
billing terms being met.
Deferred revenue which represent a contract liability, include unearned amounts related to service type warranty obligations as well as other
advances and payments which the Company received from customers prior to satisfying the performance obligation, for which revenue has not yet
been recognized. The Company's unearned performance obligations as of December 31, 2024 and the estimated revenue expected to be recognized
in the future related to the service type warranty amounts to $2.8 million, which will be fulfilled over one to five years.
F - 16
m. Accounting for Share-Based Compensation:
The Company accounts for share-based compensation in accordance with ASC 718, “Compensation-Stock Compensation” (“ASC 718”). ASC
718 requires companies to estimate the fair value of equity-based payment awards on the date of grant using an Option-Pricing Model (“OPM”).
The value of the portion of the award that is ultimately expected to vest is recognized as an expense over the requisite service periods in the
Company’s consolidated statements of operations.
The Company recognizes compensation expenses for the value of its awards granted based on the straight-line method over the requisite service
period of each of the awards. The Company accounts for forfeitures as they occur.
The Company selected the Black-Scholes-Merton option pricing model as the most appropriate fair value method for its share-option awards. The
option-pricing model requires a number of assumptions, of which the most significant are the fair market value of the underlying ordinary share,
expected share price volatility and the expected option term. Expected volatility is calculated based on actual historical stock price movements
over the most recent periods ending on the grant date, equal to the expected term of the options. The expected option term is determined based on
the simplified method, as adequate historical experience is not available to provide a reasonable estimate. The simplified method will continue to
apply until enough historical experience is available to provide a reasonable estimate of the expected term. The risk-free interest rate is based on
the yield from U.S. treasury bonds with an equivalent term. The Company has historically not paid dividends and has no foreseeable plans to pay
dividends.
The fair value of Restricted Stock Units (“RSUs”) granted is determined based on the price of the Company’s ordinary shares on the date of grant.
The Company accounts for options granted to consultants and other service providers under ASC 718. The fair value of these options was
estimated using a Black-Scholes-Merton option-pricing model.
F - 17
n.
Warrants to Acquire Ordinary Shares:
During the twelve months ended December 31, 2024, 2023, and 2022, the Company did not issue any warrants. The Company assessed the
warrants pursuant to ASC 480 “Distinguishing Liabilities from Equity” and ASC 815 “Derivatives and Hedging” and determined that the warrants
should be accounted for as equity and not as a derivative liability. Refer to Note 9f for additional information.
o.
Research and Development Costs:
Research and development costs are charged to the consolidated statement of operations as incurred and are presented net of the amount of any
grants the Company received for research and development in the period in which the grant was received.
p.
Income Taxes
The Company accounts for income taxes in accordance with ASC 740, “Income Taxes” (“ASC 740”), using the liability method whereby deferred
tax assets and liability account balances are determined based on the differences between financial reporting and the tax basis for assets and
liabilities and are measured using the enacted tax rates and laws that will be in effect when the differences are expected to reverse. The Company
provides a valuation allowance, if necessary, to reduce deferred tax assets to the amounts that are more likely-than-not to be realized.
ASC 740 contains a two-step approach to recognizing and measuring a liability for uncertain tax positions. The first step is to evaluate the tax
position taken or expected to be taken in a tax return by determining if the weight of available evidence indicates that it is more likely than not
that, on an evaluation of the technical merits, the tax position will be sustained on audit, including resolution of any related appeals or litigation
processes. The second step is to measure the tax benefit as the largest amount that is more than 50% likely to be realized upon ultimate settlement.
The Company accrues interest and penalties related to unrecognized tax benefits in its taxes on income.
As of December 31, 2024, and 2023, the Company did not identify any significant uncertain tax positions.
q.
Warranty provision:
For assurance-type warranty, the Company records a provision for the estimated cost to repair or replace products under warranty at the time of
sale. Factors that affect the Company’s warranty reserve include the number of units sold, historical and anticipated rates of warranty repairs and
the cost per repair.
US Dollars
in
thousands
Balance at December 31, 2023
$
348
Provision
825
Usage
(781)
Balance at December 31, 2024
$
392
r.
Concentrations of Credit Risks:
Financial instruments that potentially subject the Company to concentrations of credit risk consist principally of cash, cash equivalents and trade
receivables.
The Company’s cash and cash equivalents are deposited in major banks in Israel, the United States and Germany. Such deposits in the United
States may be in excess of insured limits and are not insured in other jurisdictions. The Company maintains cash and cash equivalents with diverse
financial institutions and monitors the amount of credit exposure to each financial institution. The bank deposits are held in financial institutions
which management believes are institutions with high credit standing, and accordingly, minimal credit risk from geographic or credit
concentration exists with respect to these deposits.
F - 18
The below table reflects the concentration of credit risk for the Company’s current customers as of December 31, 2024 and 2023, to which
substantial sales were made.
Concentration of credit risk with respect to trade receivable is primarily limited to a customer to which the Company makes substantial sales.
December 31,
2024
2023
Customer A
40%
-
The allowance for credit losses is based on the Company's assessments of factors that may affect a customer's ability to pay. The Company
regularly reviews the adequacy of the allowance for credit losses based on a combination of factors, including an assessment of the current
customer's aging balance, the nature and size of the customer, the financial condition of the customer, and the amount of any receivables in
dispute. The Company does not have any off-balance sheet credit exposure related to its customers. As of December 31, 2024, and 2023 trade
receivables are presented net of $160 thousand and $328 thousand allowance for credit losses, respectively.
s.
Accrued Severance Pay:
Pursuant to Israel’s Severance Pay Law, Israeli employees are entitled to severance pay equal to one month’s salary for each year of employment,
or a portion thereof. All of the employees of the LL elected to be included under section 14 of the Severance Pay Law, 1963 (“section 14”).
According to this section, these employees are entitled only to monthly deposits, at a rate of 8.33% of their monthly salary, made in their name
with insurance companies. Payments in accordance with section 14 release the Company from any future severance payments (under the above
Israeli Severance Pay Law) in respect of those employees; therefore, related assets and liabilities are not presented in the balance sheet.
Total Company’s expenses related to severance pay amounted to $126 thousand, $114 thousand and $113 thousand for the years ended December
31, 2024, 2023 and 2022, respectively.
t.
Fair Value Measurements:
Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most
advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. The Company uses a
three -tier fair value hierarchy to classify and disclose all assets and liabilities measured at fair value on a recurring basis, as well as assets and
liabilities measured at fair value on a non-recurring basis, in periods subsequent to their initial measurement. The hierarchy requires the Company
to use observable inputs when available, and to minimize the use of unobservable inputs when determining fair value. If a financial instrument
uses inputs that fall in different levels of the hierarchy, the instrument will be categorized based upon the lowest level of input that is significant to
the fair value calculation. The three -tiers are defined as follows:
▪
Level 1. Observable inputs based on unadjusted quoted prices in active markets for identical assets or liabilities;
▪
Level 2. Inputs, other than quoted prices in active markets, that are observable either directly or indirectly; and
▪
Level 3. Unobservable inputs for which there is little or no market data requiring the Company to develop its own assumptions.
The carrying amounts of cash and cash equivalents, short term deposits, trade receivables and trade payables approximate their fair value due to
the short-term maturity of such instruments.
F - 19
The following tables present information about the Company’s financial assets and liabilities that are measured in fair value on a recurring basis as
of December 31, 2024 and December 31, 2023 (in thousands):
Fair value measurements as
of
Description
Fair Value Hierarchy
December 31,
2024
December 31,
2023
Financial assets:
Money market funds included in cash and cash
equivalent
Level 1
$
2,697 $
2,550
Treasury bills included in cash and cash equivalent Level 1
$
- $
2,525
Total Assets Measured at Fair Value
$
2,697 $
5,075
Financial Liabilities:
Earnout
Level 3
$
608 $
3,292
Total liabilities measured at fair value
$
608 $
3,292
The Company classifies cash equivalents within Level 1, because the Company uses quoted market prices or alternative pricing sources and
models utilizing market observable inputs to determine their fair values.
The estimated fair value of the earnout is determined using Level 3 inputs. Inherent in a Monte Carlo simulation analysis are assumptions related
to projected revenues, expected term, volatility, annual revenue yield and interest rate. The interest rate is based on the U.S. Technology B bond
yield.
The following table summarizes the earnout liability activity as of December 31, 2024 (in thousands):
Earnout
Balance December 31, 2023
$
3,292
Change in fair value
$
(2,684)
Balance December 31, 2024
$
608
The estimated fair value of the asset group, is part of an impairment assessment, is determined using Level 3 inputs, by applying both a market and
cost approach, which we believe most accurately reflects a market participant's viewpoint in assessing its value.
u.
Basic and Diluted Net Loss Per Share:
Basic net loss per share is computed by dividing the net loss by the weighted-average number of shares of ordinary shares outstanding during the
period.
Diluted loss per share is computed based on the weighted average number of ordinary shares outstanding during the period, plus dilutive potential
shares considered outstanding during the period.
v.
Contingent liabilities
The Company accounts for its contingent liabilities in accordance with ASC 450, “Contingencies.” A provision is recorded when it is both
probable that a liability has been incurred and the amount of the loss can be reasonably estimated.
With respect to legal matters, provisions are reviewed and adjusted to reflect the impact of negotiations, estimated settlements, legal rulings,
advice of legal counsel and other information and events pertaining to a particular matter.
w. Government grants
Royalty and non-royalty-bearing grants from the Israeli Innovation Authority (the “IIA”) of the Ministry of Economy and Industry in Israel for
funding of approved research and development projects are recognized at the time the Company is entitled to such grants, on the basis of the costs
incurred, and are presented as a reduction from research and development expenses (see Note 8c).
F - 20
x.
Lessee
At the inception of an arrangement, the Company determines whether the arrangement is or contains a lease based on the unique facts and
circumstances present. Operating lease liabilities and their corresponding right-of-use assets are recorded at commencement date based on the
present value of lease payments over the expected lease term. The interest rate implicit in lease contracts is typically not readily determinable. As
such, the Company utilizes its incremental borrowing rate, which is the rate incurred to borrow on a collateralized basis over a similar term an
amount equal to the lease payments in a similar economic environment. Certain adjustments to the right-of-use asset may be required for items,
such as initial direct costs paid or incentives received. The lease terms may include options to extend or terminate the lease when it is reasonably
certain that the Company will exercise such options.
Leases with an initial term of 12 months or less are not recorded on the balance sheet.
Lessor accounting - Operating leases
A portion of the AlterG rental revenues for the AlterG Anti-Gravity systems are made through lease arrangements.
AlterG products are available for lease agreements ranging from 12 to 42 months. If the customer terminates the contract during the lease period,
they are required to pay a cancellation fee. The lease period may be extended by an additional period as specified in the contract.
In determining the leases classification as a sales type or operating lease, the Company assesses, among other criteria: (i) the lease term to
determine if it is for the major part of the economic life of the underlying equipment; and (ii) the present value of the lease payments to determine
if they are equal to or greater than substantially all of the fair market value of the equipment at the inception of the lease AlterG Anti-Gravity
systems. When these criteria are not met, the lease accounted for as operating leases and revenues are recognized over the term of the lease.
Under these arrangements, when the Company acts as the lessor for its product line, the Company accounted for the lease arrangements as
operating leases in accordance with ASC 842, “Lease” (“ASC 842”).
The total rental revenue for the AlterG Anti-Gravity Products has amounted to $719 thousand for the years ended December 31, 2024 and $249
thousand from the time of acquisition through December 31, 2023.
y.
New Accounting Pronouncements
Recently Implemented Accounting Pronouncements
In November 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2023-07,
Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures, which requires public entities to disclose information
about their reportable segments’ significant expenses and other segment items on an interim and annual basis. Public entities with a
single reportable segment are required to apply the disclosure requirements in ASU 2023-07, as well as all existing segment disclosures
and reconciliation requirements in ASC 280, “Segment Reporting” on an interim and annual basis. ASU 2023-07 is effective for fiscal
years beginning after December 15, 2023, and for interim periods within fiscal years beginning after December 15, 2024, with early
adoption permitted. The Company adopted this guidance effective January 1, 2024 retrospectively to all periods presented in financial
statements. For additional information see Note 13 of these consolidated financial statements.
F - 21
Recent Accounting Pronouncements Not Yet Adopted
i.
In December 2023, the Financial Accounting Standards Board issued Accounting Standards Update (“ASU”) 2023-09, “Income Taxes -
Improvements to Income Tax Disclosures” requiring enhancements and further transparency to certain income tax disclosures, most
notably the tax rate reconciliation and income taxes paid. This ASU is effective for fiscal years beginning after December 15, 2024 on a
prospective basis and retrospective application is permitted. The Company is currently evaluating the impact of the adoption of this
standard.
ii.
In November 2024, the FASB issued ASU 2024-03, Income Statement-Reporting Comprehensive Income-Expense Disaggregation
Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses, requiring public entities to disclose additional
information about specific expense categories in the notes to the financial statements on an interim and annual basis. ASU 2024-03 is
effective for fiscal years beginning after December 15, 2026, and for interim periods beginning after December 15, 2027, with early
adoption permitted. The Company is currently evaluating the impact of adopting ASU 2024-03.
NOTE 3:- PREPAID EXPENSES AND OTHER CURRENT ASSETS
The components of prepaid expenses and other current assets are as follows (in thousands):
December 31,
2024
2023
Government institutions
$
289 $
253
Prepaid expenses
1,046
1,227
Advances to vendors
-
139
Other assets
289
747
$
1,624 $
2,366
NOTE 4:- INVENTORIES
The components of inventories are as follows (in thousands):
December 31,
2024
2023
Finished products
$
3,580 $
3,157
Raw materials
3,143
2,496
$
6,723 $
5,653
During the twelve months ended December 31, 2024, 2023, and 2022, the Company recognized, at cost of revenues, reserves for excess and
obsolete in the amount of $981 thousand, $398 thousand, and $502 thousand, respectively.
NOTE 5:- BUSINESS COMBINATION
On August 11, 2023, pursuant to an Agreement and Plan of Merger, dated August 8, 2023, among LI, AlterG, Inc., Merger Sub, and Shareholder
Representative Services LLC, the Company acquired AlterG, Inc., which became a wholly owned subsidiary of the Company. Following the
acquisition and rebranding, AlterG, Inc. was renamed LCAI.
LCAI develops, manufactures, and markets Anti-Gravity systems for use in physical and neurological rehabilitation and athletic training, both in
the United States and internationally. The aggregate purchase price was a total of $19.0 million in cash, subject to working capital and other
customary purchase price adjustments. Additional cash earnouts may be paid based upon a percentage of AlterG’s future revenue growth over the
next two years subject to working capital and other customary purchase price adjustments.
The total consideration transferred is as follows (in thousands):
Cash
$
18,493
Earnout payments
$
3,607
Total consideration
$
22,100
F - 22
Earnout payments
The Company will pay an amount of cash equal to 65% of the amount, if any, by which AlterG revenue attributable to the first 12 months period
exceeds revenue target (“first earnout payment"), and an amount in cash equal to 65% of the amount, if any, by which AlterG revenue attributable
to the following 12 months period exceeds the revenue from the first 12 month period (“second earnout payment"). At the date of acquisition,
management estimated fair value of the earnout payment based on the actual up to date performance of the acquired entity and the probability of
the earn out payment occurrence to be at approximately $3.6 million. The Earn-out was accounted for as a liability and will be remeasured at each
reporting period through the consolidated statement of operations.
As the revenue target for the first earnout payment was not met, no earnout payment was made for the first earnout period.
The Company has accounted for the AlterG acquisition as a business combination. The Company has allocated the purchase price of
approximately $22.1 million fair values, and the excess of the purchase price over the aggregate fair values is recorded as goodwill.
The following table summarizes the fair value of assets acquired and liabilities assumed as of the acquisition date (in thousands):
Cash and cash equivalent
$
478
Restricted cash
51
Accounts receivable
1,773
Inventory
3,330
Prepaid expenses and other current assets
470
Right of use asset
1,151
Property and equipment, net
827
Other non-current assets
30
Goodwill
7,538
Intangible assets
14,133
Accounts payable
(2,082)
Accrued compensation
(766)
Other accrued liabilities
(1,059)
Deferred revenue
(2,088)
Warranty Obligations
(535)
Leases Liability
(1,151)
Total purchase consideration
$
22,100
The following table presents the details of the intangible assets acquired at the date of AlterG acquisition (in thousands):
Estimated
Estimated
Useful Life
Fair Value
(Years)
Trademark
$
795
3
Technology
6,161
4
Customer relationship - Warranty
201
2
Customer relationship - Rental
2,102
4
Customer relationship - Distribution
4,578
5
Backlog
296
1
F - 23
Under the purchase price allocation, the Company allocates the purchase price to tangible and identified intangible assets acquired and liabilities
assumed based on the estimates of their fair values. The fair values for the intangible assets acquired were based on significant inputs that are not
observable in the market and thus represent a Level 3 measurement in the fair value hierarchy. Customer relationships, distributor relationships,
backlog, trademark and developed technology were valued using the income approach, based on estimated projections of expected cash flows to
be generated by the assets, discounted to the present value at discount rates commensurate with perceived risk. The discounted cash flow analyses
factor in assumptions on revenue and expense growth rates including estimates of customer growth and attrition rates, distributor growth and
attrition rates, technology obsolescence, and relief from royalty projections. Additionally, these discounted cash flow analyses factor in expected
amounts of working capital, fixed assets, assembled workforce and cost of capital for each intangible asset.
The Company incurred acquisition-related costs of $2.5 million included in General and administrative costs.
The table below presents the unaudited pro forma revenue and earnings of the combined business as if the acquisition had occurred as of January
1, 2022 (in thousands):
Twelve Months Ended
December 31,
2023
(Unaudited)
2022
(Unaudited)
Revenues
$
24,923 $
25,307
Net loss
$
(21,761) $
(28,369)
The total revenues and net loss of AlterG, included in the consolidated statement of operations, since the acquisition date through December 31,
2023, amounted to $7,658 thousand and $249 thousand, respectively.
The pro forma financial information for all periods presented above has been calculated after adjusting the results of AlterG to reflect the business
combinations accounting effects resulting from these acquisitions.
These proforma results reflect additional depreciation and amortization that would have been charged assuming the fair value adjustments to
property, plant, and equipment and intangible asset occurred at the beginning of the period, along with consequential tax effects. The unaudited
pro forma results have been prepared for comparative purposes only and are not necessarily indicative of what would have occurred had the
business combinations been completed on January 1, 2022, nor it is necessarily indicative of future results of operations of the combined company.
Furthermore, the unaudited pro forma financial information does not reflect the impact of any synergies resulting from the acquisition.
NOTE 6:- GOODWILL AND OTHER INTANGIBLE ASSETS, NET
The Company has $7.5 million of goodwill related to its purchase of AlterG in the third quarter of fiscal year 2023, which has an indefinite life,
and is not deductible for tax purposes.
As of December 31, 2024, the components of, and changes in, the carrying amount of intangible assets, net, were as follows (in thousands):
Cost
December 31,
2024
Accumulated
Amortization
December 31,
2024
Impairment
Intangible
Assets, Net
Trademark
795
(369)
(426)
-
Technology
6,161
(2,144)
(4,017)
-
Customer relationship - Warranty
201
(140)
(61)
-
Customer relationship - Rental
2,102
(732)
(1,370)
-
Customer relationship - Distribution
4,578
(1,274)
(3,304)
-
Backlog
296
(296)
-
-
Total Amortized Intangible Assets
14,133
(4,955)
(9,178)
-
During the years ended December 31, 2024 and 2023 the Company recorded amortization expense in the amounts of $3.3 million and $1.6
million, respectively.
In the fourth quarter of 2024, the Company identified indicators of impairment related to certain acquired intangible assets, primarily due to lower-
than-expected financial performance. Following an impairment analysis, the Company recorded a non-cash impairment charge of $9.2 million
related to customer relationships, acquired technology, and trademark. No impairment of intangible assets was recorded for the year ended
December 31, 2023.
F - 24
NOTE 7:- PROPERTY AND EQUIPMENT, NET
The components of property and equipment, net are as follows (in thousands):
December 31,
2024
2023
Cost:
Computer equipment
$
1,690 $
1,690
Office furniture and equipment
468
468
Machinery and laboratory equipment
621
621
Field service units
4,464
4,166
Leasehold improvements
658
658
$
7,901 $
7,603
December 31,
2024
2023
Accumulated depreciation
7,034
6,341
Property and equipment, net
$
867 $
1,262
Depreciation expenses amounted to $494 thousand, $239 thousand, and $202 thousand for the years ended December 31, 2024, 2023 and 2022,
respectively.
In the fourth quarter of 2024, the Company recorded an impairment charge of $0.3 million related to the closure of its Fremont, California site.
The impairment was due to the reduction in the expected future use of the assets at this location. No impairment charges were recorded for the
year ended December 31, 2023.
NOTE 8:- COMMITMENTS AND CONTINGENT LIABILITIES
a.
Purchase commitment:
The Company has contractual obligations to purchase goods from its contract manufacturer as well as raw materials from different vendors.
Purchase obligations do not include contracts that may be cancelled without penalty. As of December 31, 2024, non-cancellable outstanding
obligations amounted to approximately $7.3 million.
b.
Operating lease commitment:
(i)
The Company operates from leased facilities in Israel, the United States and Germany, with leases expiring in 2025. A portion of the
Company’s facilities leases is generally subject to annual changes in the Consumer Price Index (CPI). The changes to the CPI are treated
as variable lease payments and recognized in the period in which the obligation for those payments was incurred.
(ii)
LL and LG lease cars for their employees under cancellable operating lease agreements expiring at various dates between 2025 and 2027.
A subset of the Company’s cars leases is considered variable. The variable lease payments for such cars leases are based on actual
mileage incurred at the stated contractual rate. LL and LG have an option to be released from these agreements, which may result in
penalties in a maximum amount of approximately $27 thousand as of December 31, 2024.
F - 25
The Company’s future lease payments for its facilities and cars, which are presented as current maturities of operating leases and non-current
operating leases liabilities on the Company’s consolidated balance sheets as of December 31, 2024 are as follows (in thousands):
2025
$
894
2026
23
2027
2
Total lease payments
919
Less: imputed interest
(39)
Present value of future lease payments
880
Less: current maturities of operating leases
858
Non-current operating leases
$
22
Weighted-average remaining lease term (in years)
0.75
Weighted-average discount rate
9.28%
Total lease expenses for the years ended December 31, 2024, 2023 and 2022 were $1,295 thousand, $976 thousand, and $739 thousand,
respectively.
c.
Royalties:
The Company’s research and development efforts are financed, in part, through funding from the IIA. Since the Company’s inception through
December 31, 2024, the Company received funding from the IIA in the total amount of $2.8 million. Out of the $2.8 million in funding from the
IIA, a total amount of $1.6 million were royalty-bearing grants, $400 thousand was received in consideration of 209 convertible preferred A
shares, which converted after the Company’s initial public offering in September 2014 into ordinary shares in a conversion ratio of 1 to 1, while
$806 thousand was received without future obligation. The Company is obligated to pay royalties to the IIA, amounting to 3% of the sales of the
products and other related revenues generated from such projects, up to 100% of the grants received. The royalty payment obligations also bear
interest at the SOFRPR rate. The obligation to pay these royalties is contingent on actual sales of the applicable products and in the absence of
such sales, no payment is required.
As of December 31, 2024, the Company paid royalties to the IIA in the total amount of $114 thousand.
Royalties expenses in cost of revenue were $2 thousand, $17 thousand and $7 thousand, for the years ended December 31, 2024, 2023 and 2022,
respectively.
As of December 31, 2024, the contingent liability to the IIA amounted to $1.6 million. The Israeli Research and Development Law provides that
know-how developed under an approved research and development program may not be transferred to third parties without the approval of the
IIA. Such approval is not required for the sale or export of any products resulting from such research or development. The IIA, under special
circumstances, may approve the transfer of IIA-funded know-how outside Israel.
Additionally, the License Agreement requires the Company to pay Harvard University (“Harvard”) royalties on net sales, see Note 10 below for
more information about the Collaboration Agreement (as defined below) and the License Agreement (as defined below).
d.
Liens
As part of the Company’s restricted cash and other long-term assets, as of December 31, 2024, an amount of $362 thousand has been pledged as
security in respect of a guarantee granted to a third party. Such deposit cannot be pledged to others or withdrawn without the consent of such third
party.
e.
Legal Claims:
Occasionally, the Company is involved in various claims such as product liability claims, lawsuits, regulatory examinations, investigations, and
other legal matters arising, for the most part, in the ordinary course of business. While the outcome of any pending or threatened litigation and
other legal matters is inherently uncertain, the Company does not believe the outcome of any of the matters will have a material adverse effect on
the Company’s consolidated results of operation, liquidity or financial condition.
F - 26
NOTE 9:- SHAREHOLDERS’ EQUITY
a.
Reverse share split:
At the Company’s 2023 annual general meeting, the Company’s shareholders approved (i) a reverse share split within a range of 1:2 to 1:12, to be
effective at the ratio and on a date to be determined by the Board of Directors, and (ii) amendments to the Company’s Articles of Association
authorizing an increase in the Company’s authorized share capital (and corresponding authorized number of ordinary shares, proportionally
adjusting such number for the reverse share split) so that the maximum number of authorized ordinary shares would be 120 million. In accordance
with the shareholder approval, in early March 2024 the Board of Directors of the Company approved a one-for-seven reverse share split of the
Company’s ordinary shares, reducing the number of the Company’s issued and outstanding ordinary shares from approximately 60.1 million pre-
split shares to approximately 8.6 million post-split shares. The Company’s ordinary shares began trading on a split-adjusted basis on March 15,
2024. Additionally, effective at the same time, the total authorized number of ordinary shares of the Company was adjusted to 25 million post-split
shares, the par value per share of the ordinary shares changed to NIS 1.75 and the authorized share capital of the Company changed from NIS
30,000,000 to NIS 43,750,000. All share and per share data included in these consolidated financial statements give retroactive effect to the
reverse share split for all periods presented.
Upon the effectiveness of the reverse share split, every seven shares were automatically combined and converted into one ordinary share.
Appropriate adjustments were also made to all outstanding derivative securities of the Company, including all outstanding equity awards and
warrants.
No fractional shares were issued in connection with the reverse share split. Instead, all fractional shares (including shares underlying outstanding
equity awards and warrants) were rounded down to the nearest whole number.
b.
Share option plans:
On August 19, 2014, the Company’s board of directors adopted the Lifeward Ltd. 2014 Incentive Compensation Plan or the “Plan”. The Plan
provides for the grant of stock options, stock appreciation rights, restricted stock awards, RSUs, cash-based awards, other stock-based awards and
dividend equivalents to the Company’s and its affiliates’ respective employees, non-employee directors and consultants.
Starting in 2014, the Company grants RSU as well to directors and employees under this Plan. An RSU award is an agreement to issue shares of
the company’s ordinary shares at the time the award is vested.
The options generally vest over four years, with certain options granted to non-employee directors vesting over one year.
Any options or RSUs that were forfeited or canceled before expiration were previously available for future grants under the Plan; however, since
the Plan has expired, no further grants can be made under it.
As of December 31, 2024, no ordinary shares remained reserved, as the Company’s Plan expired on August 19, 2024, and a new plan has not yet
been adopted as a replacement, as it has not been approved by the shareholders. As of December 31, 2023, the Company had reserved 145,560
ordinary shares, available for issuance to employees, directors, officers, and non-employees of the Company. This amount reflects the number of
ordinary shares after the 1-for-7 reverse share split effected by the Company on March 15, 2024.
A summary of employee and non-employee shares options activity during the fiscal year ended 2024 is as follows:
Number
Weighted
average
exercise
price
Weighted
average
remaining
contractual
life (years)
Aggregate
intrinsic
value (in
thousands)
Options outstanding at the beginning of the year
4,723 $
259.73
4.39 $
-
Granted
-
-
-
-
Exercised
-
-
-
-
Forfeited
(150)
1340.84
-
-
Options outstanding at the end of the year
4,573 $
187.94
3.47 $
-
Options exercisable at the end of the year
4,573 $
187.94
3.47 $
-
F - 27
There were no options granted during the fiscal year ended December 31, 2024, 2023 and 2022. The aggregate intrinsic value in the table above
represents the total intrinsic value that would have been received by the option holders had all option holders, which hold options with positive
intrinsic value, exercised their options on the last date of the exercise period. During the years ended December 31, 2024, 2023 and 2022, no
options were exercised.
A summary of employee and non-employee RSUs activity during the fiscal year ended 2024 is as follows:
Number of
shares
underlying
outstanding
RSUs
Weighted-
average
grant date
fair value
Unvested RSUs at the beginning of the year
538,885
6.07
Granted
14,740
4.80
Vested
(221,003)
6.55
Forfeited
(5,379)
6.51
Unvested RSUs at the end of the year
327,243
5.68
The weighted average grant date fair values of RSUs granted during the fiscal year ended December 31, 2024, 2023 and 2022, were $4.80, $4.62
and $7.00, respectively.
Total fair value of shares vested during the year ended December 31, 2024, 2023 and 2022 were $1,447 thousand, $1,268 thousand, and $860
thousand, respectively. As of December 31, 2024, there were $1.5 million of total unrecognized compensation cost related to non-vested share-
based compensation arrangements granted under the Plan. This cost is expected to be recognized over a period of approximately 2.1 years.
The number of options and RSUs outstanding as of December 31, 2024 is set forth below, with options separated by range of exercise price:
Range of exercise price
Options and
RSUs
Outstanding
as of
December 31,
2024
Weighted
average
remaining
contractual
life
(years) (1)
Options
Exercisable
as of
December 31,
2024
Weighted
average
remaining
contractual
life
(years) (1)
RSUs only
327,243
-
-
-
$37.6
1,774
4.24
1,774
4.24
$178.5 - $236.3
1,845
3.32
1,845
3.32
$350 - $367.5
864
2.46
864
2.46
$1,277.5 - $3,634.8
90
0.96
90
0.96
331,816
3.47
4,573
3.47
(1)
Calculation of weighted average remaining contractual term does not include the RSUs that were granted, which have an indefinite
contractual term.
F - 28
c.
Equity compensation issued to consultants:
The Company granted 4,700 RSUs during the fiscal year ended December 31, 2024, to non-employee consultants. As of December 31, 2024, no
RSUs were outstanding.
d.
Share-based compensation expense for employees and non-employees:
The Company recognized share-based compensation expense in the consolidated statements of operations as follows (in thousands):
Year Ended December 31,
2024
2023
2022
Cost of revenue
$
16 $
9 $
16
Research and development, net
168
157
94
Sales and marketing
401
381
250
General and administrative
696
781
633
Total
$
1,281 $
1,328 $
993
e.
Treasury shares:
On June 2, 2022, the Company’s Board of Directors approved a share repurchase program to repurchase up to $8.0 million of its Ordinary Shares,
par value NIS 0.25 per share. On July 21, 2022, the Company received approval from an Israeli court for the share repurchase program. The
program was scheduled to expire on the earlier of January 20, 2023, or reaching $8.0 million of repurchases. On December 22, 2022, the
Company’s Board of Directors approved an extension of the repurchase program, with such extension to be in the aggregate amount of up to $5.8
million. The extension was approved by an Israeli court on February 9, 2023, and it expired on August 9, 2023.
As of December 31, 2024, pursuant to the Company’s share repurchase program, the Company had repurchased a total of 574,658 of its
outstanding ordinary shares at a total cost of $3.5 million. This amount reflects the number of ordinary shares after the 1-for-7 reverse share split
effected by the Company on March 15, 2024, which also resulted in an increase of the par value per share to NIS 1.75.
f.
Warrants to purchase ordinary shares:
The following table summarizes information about warrants outstanding and exercisable as of December 31, 2024:
Issuance date
Warrants
outstanding
Exercise
price
per warrant
Warrants
outstanding
and
exercisable
Contractual
term
(number)
(number)
December 31, 2015 (1)
681 $
52.50
681
See footnote (1)
December 28, 2016 (2)
272 $
52.50
272
See footnote (1)
February 10, 2020 (3)
4,054 $
8.75
4,054
February 10, 2025
February 10, 2020 (4)
15,120 $
10.94
15,120
February 5, 2025
July 6, 2020 (5)
64,099 $
12.32
64,099
January 2, 2026
July 6, 2020 (6)
42,326 $
15.95
42,326
July 2, 2025
December 8, 2020 (7)
83,821 $
9.38
83,821
June 8, 2026
December 8, 2020 (8)
15,543 $
12.55
15,543
June 8, 2026
February 26, 2021 (9)
780,095 $
25.20
780,095
August 26, 2026
February 26, 2021 (10)
93,612 $
32.05
93,612
August 26, 2026
September 29, 2021 (11)
1,143,821 $
14.00
1,143,821
March 29, 2027
September 29, 2021 (12)
137,257 $
17.81
137,257
September 27, 2026
2,380,701
2,380,701
F - 29
(1)
Represents warrants for ordinary shares issuable upon an exercise price of $52.50 per share, which were granted on December 31, 2015
to Kreos Capital V (Expert) Fund Limited (“Kreos”) in connection with a loan made by Kreos to the Company and are currently
exercisable (in whole or in part) until the earlier of (i) December 30, 2025 or (ii) immediately prior to the consummation of a merger,
consolidation, or reorganization of the Company with or into, or the sale or license of all or substantially all the assets or shares of the
Company to, any other entity or person, other than a wholly owned subsidiary of the Company, excluding any transaction in which the
Company’s shareholders prior to the transaction will hold more than 50% of the voting and economic rights of the surviving entity after
the transaction. None of these warrants had been exercised as of December 31, 2024.
(2)
Represents common warrants that were issued as part of the $8.0 million drawdown under the Loan Agreement which occurred on
December 28, 2016. See footnote 1 for exercisability terms.
(3)
Represents warrants that were issued to certain institutional purchasers in a private placement in the Company’s best efforts offering of
ordinary shares in February 2020. As of December 31, 2024, 534,300 warrants were exercised for total consideration of $4,675,125.
During the twelve months that ended December 31, 2024, no warrants were exercised.
(4)
Represents warrants that were issued to the placement agent as compensation for its role in the Company’s February 2020 best efforts
offering. As of December 31, 2024, 32,880 warrants were exercised for total consideration of $359,625. During the twelve months that
ended December 31, 2024, no warrants were exercised.
(5)
Represents warrants that were issued to certain institutional purchasers in a private placement in the Company’s registered direct offering
of ordinary shares in July 2020. As of December 31, 2024, 288,634 warrants were exercised for total consideration of $3,555,976. During
the twelve months that ended December 31, 2024, no warrants were exercised.
(6)
Represents warrants that were issued to the placement agent as compensation for its role in the Company’s July 2020 registered direct
offering.
(7)
Represents warrants that were issued to certain institutional purchasers in a private placement in the Company’s private placement
offering of ordinary shares in December 2020. As of December 31, 2024, 514,010 warrants were exercised for total consideration of
$4,821,416. During the twelve months that ended December 31, 2024, no warrants were exercised.
(8)
Represents warrants that were issued to the placement agent as compensation for its role in the Company’s December 2020 private
placement. As of December 31, 2024, 32,283 warrants were exercised for total consideration of $405,003. During the twelve months that
ended December 31, 2024, no warrants were exercised.
(9)
Represents warrants that were issued to certain institutional purchasers in a private placement in the Company’s private placement
offering of ordinary shares in February 2021.
(10)
Represents warrants that were issued to the placement agent as compensation for its role in the Company’s February 2021 private
placement.
(11)
Represents warrants that were issued to certain institutional purchasers in a private placement in the Company’s registered direct offering
of ordinary shares in September 2021.
(12)
Represents warrants that were issued to the placement agent as compensation for its role in the Company’s September 2021 registered
direct offering.
F - 30
NOTE 10:- RESEARCH COLLABORATION AGREEMENT AND LICENSE AGREEMENT
On May 16, 2016, the Company entered into a Collaboration Agreement (as amended, the “Collaboration Agreement”) and an Exclusive License
Agreement (as amended, the “License Agreement”) with Harvard. The Collaboration Agreement concluded on March 31, 2022.
Under the License Agreement, Harvard has granted the Company an exclusive, worldwide royalty-bearing license under certain patents of
Harvard relating to lightweight “soft suit” exoskeleton system technologies for lower limb disabilities, a royalty-free license under certain related
know-how and the option to obtain a license under certain inventions conceived under the joint research collaboration.
The License Agreement required the Company to pay Harvard an upfront fee, reimbursements for expenses that Harvard incurred in connection
with the licensed patents, royalties on net sales and several milestone payments contingent upon the achievement of certain product development
and commercialization milestones. The Harvard License Agreement will continue in full force and effect until the expiration of the last-to-expire
valid claim of the licensed patents.
As of December 31, 2024, the Company achieved three of the milestones which represent all development milestones under the License
Agreement. The Company continues to evaluate the likelihood that the other milestones will be achieved on a quarterly basis.
The Company has recorded expenses in the amount of $51 thousand, $29 thousand, and $74 thousand as research and development expenses
related to the License Agreement and to the Collaboration Agreement for the years ended December 31, 2024, 2023 and 2022, respectively. No
withholding tax was deducted from the Company’s payments to Harvard in respect of the Collaboration Agreement and the License Agreement
since this is not taxable income in Israel in accordance with Section 170 of the Israel Income Tax Ordinance 1961-5721.
NOTE 11:- INCOME TAXES
The Company’s subsidiaries are separately taxed under the domestic tax laws of the jurisdiction of incorporation of each entity.
a.
Corporate tax rates in Israel:
Presented hereunder are the tax rates relevant to the Company in the years 2022-2024:
The Israeli statutory corporate tax rate and real capital gains were 23% in the years 2022-2024.
b.
Income (loss) before taxes on income is comprised as follows (in thousands):
Year Ended December 31,
2024
2023
2022
Domestic
$
(15,022) $
(19,638) $
(19,110)
Foreign
(13,877)
(2,507)
8
$
(28,899) $
(22,145) $
(19,102)
c.
Taxes on income (benefit) are comprised as follows (in thousands):
Year Ended December 31,
2024
2023
2022
Current
$
43 $
(12) $
151
Deferred
-
-
316
$
43 $
(12) $
467
F - 31
Year Ended December 31,
2024
2023
2022
Domestic
$
- $
- $
-
Foreign
43
(12)
467
$
43 $
(12) $
467
d.
Deferred income taxes (in thousands):
Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial
reporting purposes and the amounts used for income tax purposes. The Company’s deferred tax assets as of December 31, 2024 and 2023 are
derived from temporary differences.
In assessing the realization of deferred tax assets, the Company considers whether it is more likely than not that all or some portion of the deferred
tax assets will not be realized. Based on the Company’s history of losses, the Company established a full valuation allowance for LL.
Undistributed earnings of certain subsidiaries as of December 31, 2024 were immaterial. The Company intends to reinvest these earnings
indefinitely in the foreign subsidiaries. As a result, the Company has not provided for any deferred income taxes.
December 31,
2024
2023
Deferred tax assets:
Carry forward tax losses
$
70,430 $
64,090
Research and development expenses
1,378
1,311
Accrual and reserves
661
849
Share based compensation
507
394
Credit tax carry forwards
1,913
1,714
Intangible Assets
140
-
Lease liabilities
224
480
Total deferred tax assets
75,253
68,838
Valuation allowance
(75,055)
(65,209)
Deferred tax assets after valuation allowance
$
198 $
3,629
Deferred tax liabilities:
Right-of-use asset
(136)
(470)
Intangible Assets
-
(3,015)
Property and equipment
(62)
(144)
Total deferred tax liabilities
(198)
(3,629)
Net deferred tax assets
$
- $
-
The net changes in the total valuation allowance for each of the years ended December 31, 2024, 2023 and 2022, are comprised as follows (in
thousands):
Year Ended December 31,
2024
2023
2022
Balance at beginning of year
$
(65,209) $
(52,525) $
(48,098)
Changes due to exchange rate differences
-
-
1,418
Adjustment previous year loss
100
(5)
(14)
Acquisition
-
(7,269)
-
Additions during the year
(9,946)
(5,410)
(5,831)
Balance at end of year
$
(75,055) $
(65,209) $
(52,525)
F - 32
e.
Reconciliation of the theoretical tax expenses:
A reconciliation between the theoretical tax expense, assuming all income is taxed at the statutory tax rate applicable to income of the Company,
and the actual tax expense (benefit) as reported in the consolidated statements of operations is as follows (in thousands):
Year Ended December 31,
2024
2023
2022
Loss before taxes, as reported in the consolidated statements of operations
$
(28,899) $
(22,145) $
(19,102)
Statutory tax rate
23%
23%
23.0%
Theoretical tax benefits on the above amount at the Israeli statutory tax rate
$
(6,646) $
(5,093) $
(4,393)
Income tax at rate other than the Israeli statutory tax rate
(2,364)
56
(2)
Non-deductible expenses including equity-based compensation expenses and other
-
-
262
Operating losses and other temporary differences for which valuation allowance was
provided
9,846
5,410
5,375
Permanent differences
(496)
(342)
(775)
Adjustment in respect of prior years
(297)
(43)
-
Actual tax expense (benefit)
$
43 $
(12) $
467
f.
Foreign tax rates:
Taxable income of LI and LCAI was subject to tax at the rate of 21% in 2024, 2023 and 2022.
Taxable income of LG was subject to tax at the rate of 30% in 2024, 2023, and 2022.
g.
Tax assessments:
LL has had final tax assessments up to and including the 2019 tax year. LG has had final tax assessments up to and including the 2018 tax year.
F - 33
LI and LCAI file income tax returns in the United States and in various U.S. states. The returns for the years ended December 31, 2021, and later
are generally subject to federal tax examination, while the returns for the years ended December 31, 2020, and later are generally subject to state
tax examination. However, net operating losses and tax credits generally remain subject to tax examination and adjustment until they are utilized
on a future tax return and the statute of limitations closes for that year. Therefore, tax attributes generally remain open to both federal and state tax
examination and adjustment.
h.
Net operating carry-forward losses for tax purposes:
As of December 31, 2024, LL has carry-forward losses amounting to approximately $256.5 million, which can be carried forward for an indefinite
period.
As of December 31, 2024, the Company had approximately $48.7 million of U.S. federal net operating loss (“NOL”) carry forwards, and $30.9
million of state NOL carry forwards, which will begin to expire in 2025 and 2028, respectively. The federal net operating losses from years
beginning after January 1, 2018, of approximately $19.2 million may be carried forward indefinitely and losses prior to January 1, 2018 of
approximately $29.5 million expire beginning in 2027 under prior law.
Internal Revenue Code Section 382 places a limitation (“Section 382 Limitation") on the amount of taxable income which can be offset by NOL
carry forwards after a change in control (generally greater than 50% change in the value of the stock owned by 5% shareholders during the testing
period) of a loss corporation. California has similar rules. On August 11, 2023, AlterG was involved in an equity transaction that constitutes a
Section 382 change in ownership. The change in ownership limits the ability to utilize net operating loss carry forwards in future years. The 382-
limitation impact on NOLs has been included in the current period provision. The Company may have had earlier Section 382 changes in
ownership. This will be assessed upon realization of tax attributes.
NOTE 12:- FINANCIAL (EXPENSES) INCOME, NET
The components of financial (expenses) income, net were as follows (in thousands):
Year Ended December 31,
2024
2023
2022
Foreign currency transactions and other
$
(67) $
133 $
22
Interest Income
643
1,354
-
Bank commissions
(128)
(20)
(22)
$
448 $
1,467 $
*)
*) Represent an amount lower than $1.
NOTE 13:- REPORTABLE SEGMENT
ASC 280, “Segment Reporting,” establishes standards for reporting information about operating segments. Operating segments are defined as
components of an enterprise about which separate financial information is available that is evaluated regularly by the chief operating decision
maker ("CODM") in deciding how to allocate resources and in assessing performance. The Company manages its business on the basis
of one reportable segment and unit and derives revenues mainly from products, rental revenues and warranty and services (see Note 1 for a brief
description of the Company’s business and Note 2l for details on the Company's revenue recognition).
The Company operates as one operating segment. Operating segments are defined as components of an enterprise for which separate financial
information is regularly evaluated by the CODM, which is the Company’s chief executive officer, who reviews financial information and annual
operating plans presented on a consolidated basis, for purposes of making operating decisions, evaluating financial performance, and allocating
resources. There is no expense or asset information, that are supplemental to those disclosed in these consolidated financial statements, that are
regularly provided to the CODM. The allocation of resources and assessment of performance of the operating segment is based on consolidated
net loss as shown in our consolidated statements of operations. The CODM considers net loss in the annual forecasting process and reviews actual
results when making decisions about allocating resources. Since the Company operates as one operating segment, financial segment information,
including profit or loss and asset information, can be found in the consolidated financial statements.
F - 34
NOTE 14:- GEOGRAPHIC INFORMATION AND MAJOR CUSTOMER AND PRODUCT DATA
Total revenues from external customers on the basis of the Company's geographical areas are as follows (in thousands):
Year Ended December 31,
2024
2023
2022
Revenue based on customer’s location:
United States
14,425
7,636
2,303
Europe
9,546
5,044
3,057
Asia-Pacific
825
387
115
Rest of the world
867
787
36
Total revenues
$
25,663 $
13,854 $
5,511
December 31,
2024
2023
Long-lived assets by geographic region:
Israel
$
359 $
529
United States
947
2,404
Germany
109
190
$
1,415 $
3,123
(*) Long-lived assets are comprised of property and equipment, net, and operating lease right-of-use assets.
Major customers data as a percentage of total revenue:
Year Ended December 31,
2024
2023
2022
Customer A
12.3%
-
-
Customer B
(*)
12.2%
14.2%
*) Less than 10%
NOTE 15:- BASIC AND DILUTED NET LOSS PER SHARE
The following table sets forth the computation of the Company’s basic and diluted net loss per ordinary share (in thousands, except share and per
share data):
Year ended December 31,
2024
2023
2022
Net loss
$
(28,942) $
(22,133) $
(19,569)
Net loss attributable to ordinary shares
(28,942)
(22,133)
(19,569)
Shares used in computing net loss per ordinary shares, basic and diluted *
8,691,271
8,531,294
8,911,256
Net loss per ordinary share, basic and diluted
$
(3.33) $
(2.59) $
(2.20)
(*) Reflects one-for-seven reverse share split that became effective on March 15, 2024. See Note 9a to the consolidated financial statements.
F - 35
Basic and diluted net loss per share was the same for each period presented as the inclusion of all potential shares of ordinary shares and warrants
outstanding would have been anti-dilutive.
For the twelve months ended December 31, 2024 and 2023 the total number of ordinary shares related to the outstanding warrants and share
option plans aggregated to 2,385,274 and 2,745,792, respectively. The amount was excluded from the calculations of diluted loss per ordinary
share since it would have an anti-dilutive effect.
NOTE 16:- RESTRUCTURING ACTIVITIES
On November 4, 2024, the Company announced plans to streamline its U.S. operations, including the closure of its facility in Fremont, California,
and the transition of AlterG Anti-Gravity Systems manufacturing to Cirtronics Corporation, a nationally recognized contract manufacturer
specializing in precision medical devices.
During the year ended December 31, 2024, the Company recorded restructuring expenses of $415 thousand, primarily related to employee
termination benefits and site closure expenses, including facility decommissioning, waste disposal, and other related costs. Of the total
restructuring expenses, $350 thousand were attributable to cost of goods sold and $65 thousand to general and administrative expenses. As of
December 31, 2024, none of these amounts had been paid. The Company does not expect to incur additional material costs related to this
restructuring initiative.
NOTE 17:- SUBSEQUENT EVENTS
On January 7, 2025, the Company entered into a purchase agreement for the issuance and sale of 1,818,183 ordinary shares and accompanying
ordinary warrants to purchase up to an aggregate of 1,818,183 Ordinary Shares at an exercise price of $2.75 per share. The shares were sold at an
offering price of $2.75 each, and the offering was conducted pursuant to the Company’s shelf registration statement on Form S-3. The gross
proceeds to the Company from the offering were approximately $5.0 million. In connection with the offering, the Company issued to the
placement agent, H.C. Wainwright & Co. LLC, warrants to purchase up to 109,091 Ordinary Shares at an exercise price of $3.4375 per share,
representing 125% of the offering price. The Company intends to use the net proceeds from the offering for continuing commercial efforts,
working capital, and general corporate purposes.
F - 36
Exhibit 10.22
AMENDMENT #1 TO EXECUTIVE EMPLOYMENT AGREEMENT
This Amendment #1 to the Executive Employment Agreement (this “Amendment”) is made and entered into on September 23, 2020, by and
between ReWalk
Robotics Inc. (formerly Argo Medical Technologies Inc.),a Delaware corporation (the “Company”), and Larry Jasinski (the
“Employee”). The Company and the Employee shall each be
referred to as a “Party” and shall together be referred to as the “Parties”.
WHEREAS, the Parties have entered into an Executive Employment Agreement, dated as of January 17,2011 (the “Agreement”); and
WHEREAS, the Parties wish to make certain amendments to the Agreement, as set forth herein.
NOW, THEREFORE, IT IS DECLARED COVENANTED AND AGREED BETWEEN THE PARTIES AS FOLLOWS:
1.
The below provisions shall be added to the Agreement as Section 5.3, immediately following Section 5.2:
“Change of Control. In the event that the Employee’s employment with the Company is terminated by the Company (or its successor) not
for Cause (as defined in
the Agreement) or by the Employee for Good Reason within one year following a Change of Control, the
Employee shall be entitled to a special severance grant (“Severance”) in the form of:
(i)
18 months of the Employee’s Base Salary (as defined in the Agreement); and
(ii)
An annual bonus for the year in which the termination occurs, equal to the bonus that the Employee would have received assuming he
had not been terminated prior to the applicable date of payment of such bonus and also assuming
achievement of 100% of the milestones
and targets as established by the Company’s board of directors for the applicable year of termination; such bonus shall be payable
promptly following the termination.
For purposes of this Agreement, the term “Change of Control” shall have the meaning set forth in Section 2.10 of the
Company’s Amended and Restated 2014
Incentive Compensation Plan.
For purposes of this Agreement, the term “Good Reason” means Employee resigns due to (i) he no longer reports to a person
with a grade level equal to or
higher than his (ii) relocation of the Employee by the Company without Employee’s express
written consent to a facility or location more than fifty (50) kilometers from Employee’s then-current location in one or more
steps; (iii) a ten percent
(10%) or greater reduction in the Base Salary (other than an equivalent percentage reduction in the base
salaries that applies to Employee’s entire business unit); or (iv) a material breach by the Company of the Employment
Agreement; provided,
however, that with respect to each of the foregoing, Employee must (a) within ninety (90) days following
its occurrence, deliver to the Company a written explanation specifying the specific basis for Employee’s belief that he is
entitled to
terminate his employment for Good Reason, (b) give the Company an opportunity to cure any of the foregoing within
thirty (30) days following delivery of such explanation and (c) provided Company has failed to cure any of the foregoing within
such
thirty (30) day cure period, terminate Employee’s employment within thirty (30) days following expiration of such cure
period.
2.
The Severance, if paid, will be paid through the last pay-slip of the Employee and will not constitute a portion of the Employee’s salary for any
purpose whatsoever, including for the purpose of the calculation of severance pay and
social insurance. Any tax liability in connection with the
Severance shall be borne solely by the Employee.
3.
Nothing in this Amendment shall provide the Employee with guaranteed employment for any specific period, and the Company reserves the right to
terminate the Employee employment, subject to the terms of the Agreement and applicable law.
Except as specifically modified by this Amendment,
all other terms and conditions of the Agreement remain unchanged and in full force and effect in accordance therewith. The Company and the
Employee represent and warrant that, as of the
date hereof, no other agreements, written or oral, exist between the Parties with respect to the subject
matter covered herein except for the Agreement and this Amendment. The Parties acknowledge and agree that in the event of a conflict
between the
terms amended pursuant to this Amendment and the other terms of the Agreement, the terms of this Amendment shall govern.
[Signature Page Follows]
IN WITNESS WHEREOF, THE PARTIES HERETO HAVE CAUSED THIS AMENDMENT TO BE EXECUTED ON THE DATE FIRST WRITTEN
ABOVE.
ReWalk Robotics Ltd. / Inc.
By: /s/ Jeff Dykan
/s/ Larry Jasinski
Name: Jeff Dykan
Larry Jasinski
Title: Chairman
Exhibit 10.23
CERTAIN INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY [***],
HAS BEEN OMITTED BECAUSE IT IS BOTH NOT MATERIAL AND IS THE TYPE
THAT THE REGISTRANT TREATS AS PRIVATE OR CONFIDENTIAL.
MANUFACTURING SERVICES AGREEMENT
THIS MANUFACTURING SERVICES AGREEMENT
(this “Agreement”) is made on October 3, 2024 (the “Effective Date”), by and between
Lifeward, Inc., a Delaware corporation having a principal place of business at 200 Donald Lynch
Blvd., Marlborough, MA 01752 (“Customer”), and
Cirtronics
Corporation, a New Hampshire corporation having a place of business at 528 Route 13 South, Milford, NH 03055 (“Cirtronics”). Customer
and Cirtronics are sometimes referred to in this Agreement individually as a “Party” and collectively as the “Parties.”
1. TERM AND SCOPE
1.1 Term. The initial term of this Agreement shall commence on the Effective Date and
shall continue through the fifth anniversary of the
Effective Date unless sooner terminated by mutual agreement of the Parties or in accordance with this Agreement (the “Initial Term”). The term of this
Agreement shall automatically renew for successive periods of one (1) year each (each, a “ Renewal Term”) unless a Party notifies the other Party of non-
renewal
at least one year prior the expiration of the Initial Term or then-current Renewal Term. The Initial Term and all of the Renewal Terms, if any, are
referred to as the “Term.”
1.2 Scope. This Agreement covers Cirtronics making for Customer, and Customer
purchasing from Cirtronics, such quantity of Products (as
defined in Section 2.1(a)) as Customer may order from Cirtronics from time to time during the Term.
1.3 Business Day. The term “business day” as used in this Agreement shall mean each
day other than Saturday, Sunday, a day on which
commercial banks in Boston, Massachusetts are permitted or required to be closed and any other scheduled holiday of either of the Parties. If any time
period set forth in this Agreement expires
upon a day that is not a business day, such period shall be extended to and through the next succeeding day that is
a business day.
2. PRICING
2.1 Pricing.
(a) Pricing. During the Term, Customer shall have the right to purchase from
Cirtronics the products specified on Exhibit A and/or
a Product
Quotation generated by Cirtronics and accepted by Customer (“Products”) at the prices or price models set forth in Exhibit A and/or a Product
Quotation accepted by Customer (“Prices”). Prices are in U.S. Dollars and are based on (i) the configuration set forth in Customer’s specifications
provided to Cirtronics and referenced in Cirtronics’ Product Quotation or other document signed by the Parties setting forth
specifications, which
specifications shall have the content set forth in Section 12.4 (“Specifications”) and (ii) the projected
volumes of Products to be sold to Customer,
minimum run rates, and other pricing assumptions (“Assumptions”) set forth in Exhibit A and/or Cirtronics’ Product Quotation accepted by Customer.
(b) New Products Pricing. The Parties agree to use the following methodology to add
new Products to this Agreement. Cirtronics
shall issue a product quotation to Customer listing the Product and the proposed pricing or pricing model for such new Product (“Product Quotation”). If
Customer desires to accept the Product Quotation, it may do so by providing Cirtronics with written
acceptance of the Product Quotation (by electronic
mail or facsimile) or issuing a purchase order (an “Order”) for the new Product and Pricing as specified in the Product Quotation. All Product Quotations
accepted by Customer in writing (including by issuing an Order that references the Product
Quotation) are a part of this Agreement as if set out herein in its
entirety.
2.2 Exclusions from Price.
(a) Prices
do not include freight, export, and/or import licensing of the Product, or payment of broker’s fees, duties, tariffs, or other
similar charges. All such charges and documentation shall be the sole responsibility of Customer.
(b) Prices
do not include taxes or charges imposed by any taxing authority upon the manufacture, sale, shipment, storage, “value
add,” or use of the Product which Cirtronics is obligated to pay or collect. All such taxes shall be the sole responsibility of
Customer.
(c) Prices
do not include the cost of compliance with any environmental legislation that relates to the return of end of life Product
from Customer to Cirtronics for disposal. If Cirtronics is required to comply with such environmental legislation,
Customer will compensate Cirtronics for
all reasonable costs incurred in connection with such compliance, chargeable on a monthly basis.
(d) Prices do not include setup, tooling, or non-recurring engineering activities (collectively “NRE Charges”), which shall be
separately stated and invoiced to Customer. The total NRE Charges for the AlterG Product (as defined
in Section 4.4(a)) are not to exceed [***].
(e) Prices
do not include expedited fees or premiums charged by suppliers of material resulting from Customer’s schedule changes
as permitted herein. Such charges will be separately stated and invoiced to Customer
2.3 Other Price Adjustments.
(a) Pricing Assumptions. Customer acknowledges that the Prices set forth in a Product
Quotation accepted by Customer are based
on the Assumptions set forth in the Product Quotation accepted by Customer. If one or more of the Assumptions proves to be incorrect and Cirtronics
experiences a decrease or increase in cost as a
result, Cirtronics has the right to re-quote the Prices of the affected Products by submitting a Product
Quotation with revised Prices and/or pricing model to Customer. The Price for all Orders for the affected Product submitted prior to
Cirtronics submitting
a Product Quotation with the re-quoted Prices shall not change, but the Price for any Orders submitted by Customer after receipt of an updated Product
Quotation with the re-quoted Prices shall be at the re-quoted Prices.
(b) Material Pricing. Subject to compliance with Section 4.4(b), the Price for a given unit of the Product will reflect a passthrough
of the
actual cost of all Materials (as defined in Section 4.4(b)) within the bill
of materials (“BOM”) for such Product using a first in
first out accounting
method regardless of whether the actual cost of Materials within the BOM is higher than or less than the Target BOM Cost (as defined in Section 4.4(b))
for such Product. In accounting for use of Materials, Cirtronics shall treat Customer-Furnished Items that Customer currently has in its own
inventory and
actually transfers to Cirtronics for use in assembling AlterG Products as being used before using corresponding Materials sourced by Cirtronics, whether or
not such Customer-Furnished Items are actually used in assembling the
AlterG Products before Materials sourced by Cirtronics are used in assembling the
AlterG Products.
(c) Labor Pricing. Cirtronics may adjust the labor rate for Prices that are
calculated using an agreed pricing model (such as the
pricing model for the Products set forth on Exhibit A) once per calendar year by giving Customer at least sixty (60) days prior written notice of the new
labor rate; provided that no such adjustment shall exceed the rate of change in the Producer
Price Index: Medical Equipment and Supplies Manufacturing
(U.S. Bureau of Labor Statistics, Producer Price Index by Industry: Medical Equipment and Supplies Manufacturing [PCU33913391], retrieved from
FRED, Federal Reserve Bank of St. Louis; https://fred.stlouisfed.org/series/PCU33913391) during the most recent twelve month period for which data is
available as of the date of such notice.
(d) Customer shall be entitled to a price adjustment resulting from cost savings in accordance with Section 7.3.
2.4 Product Ordering. Product ordering shall be in accordance with the schedule or
method of releases by Orders set forth in Section 4.
3. INVOICING AND PAYMENT TERMS
(a) Cirtronics shall invoice Customer for Products upon delivery of Products in accordance with Section 5.1. In addition, Cirtronics
may invoice (i) Customer for fifty percent (50%) of the cost of Materials in the nature of treadmills, steel,
shorts and bags (or any other items that require
advance payment to suppliers) for the AlterG Product at the time of Cirtronics ordering such Materials from the relevant supplier(s) and (ii) fifty percent
(50%) upon such Materials being shipped
to Cirtronics.
(b) Payment of undisputed amounts is due within [***] of the date of Cirtronics’ invoice, except that Customer shall pay invoices
issued under clause (i) of Section 3(a) within [***] after the date of each such invoice. Cirtronics has the right to charge
Customer interest at the rate of
[***]% per month on undisputed amounts from the due date to the date of payment in full in good funds. Payment shall be made in U.S. Dollars.
4. PURCHASE ORDERS
4.1 Purchase Orders.
(a) Customer
will issue to Cirtronics specific Orders for Product covered by this Agreement. Each Order shall be in the form of a
written or electronic communication and shall contain the following information: (i) a description of the Product by model number
including revision; (ii)
the quantity of the Product; (iii) the desired shipment date; (iv) the destination location to which the Product is to be delivered; and (v) transportation
instructions. Each Order shall provide an order number for
billing purposes.
(b) Cirtronics
has the right to accept or reject the Order within five (5) business days of receiving the Order; provided that:
(i) if
Cirtronics does not accept or reject the Order within such five (5) business day period, the Order shall be deemed
accepted by Cirtronics; provided there is documentation evidencing Cirtronics’ actual receipt of the Order from Customer; and
(ii) Cirtronics may reject an Order only if the Order does not comply with the requirements of this Agreement or the
associated Product Quotation such as a lead time that is less
than that permitted by Section 4.1(c).
(c) Lead
times from date of receipt of an Order until the delivery date for the quantity of Product set forth in such Order will be as
set forth in applicable Product Quotation or if not so set, then [***] after the business day on which Cirtronics
receives the Order.
4.2 Forecasting. The Parties currently intend to use annual blanket Orders issued by
Customer as the means to forecast unit deliveries during
each applicable annual period. If Customer determines that it will need, for such annual period, additional units of a Product beyond the quantity set forth
in any such blanket Order,
Customer will notify Cirtronics of such fact, and the Parties shall collaborate on the most cost-effective way for Cirtronics to
deliver the additional units within the required time period. Based on that collaboration, Customer will issue a
new Order to Cirtronics for such additional
units.
4.3 Reschedule.
(a) Customer may reschedule the date of all or part of any scheduled shipment specified in any accepted Order [***] per calendar
quarter for a period not to exceed [***] in
accordance with the table below; provided, that the aggregate sales dollars for all Orders issued within the time
periods set forth below do not fall below the aggregate sales dollar percentages specified therein. Any Excess Material (as
defined in Section 4.4(d)) and/or
Obsolete Material (as defined in Section
4.4(d)) resulting from such reductions in schedule shall be disposed of in
accordance with this Agreement. For
example, if Customer reschedules a shipment date more than [***] but less than [***]prior to a scheduled shipment date, Customer may reduce the
shipment by up to [***] of the Order.
Calendar Days Before Scheduled P.O. Shipment Date
Sales Dollars Percentage Change Allowance
0 – 30
[***]
31 – 45
[***]
46 – 90
[***]
> 90
[***]
(b) Cirtronics
shall use reasonable commercial efforts to accommodate any upside schedule changes beyond the original delivery
date specified in the Order accepted by Cirtronics. Should there be any increased costs, including but not limited to, expedited fees
or premiums charged
by suppliers of material or labor expedite costs incurred by Cirtronics to reduce the manufacturing cycle time of the Product, Customer shall be responsible
for such charges subject to Customer’s prior approval to incur such
charges, such approval to be deemed granted if Customer does not object to such
charges within three (3) business days of receipt of written notice thereof from Cirtronics (which notice may be by email).
4.4 Target BOM Cost; Materials Purchasing; Minimum Buys; Excess and Obsolete Inventory.
(a) Target BOM Cost. Exhibit A sets forth for Customer’s AlterG Product (the “AlterG Product”) the target cost for the BOM for
a single unit of the AlterG Product as of the Effective Date (the “AlterG Target BOM Cost”). Each Product Quotation for a new Product
shall also set
forth a target cost for the BOM for a single unit of such Product as of the date of such Product Quotation (with each such target BOM cost and the AlterG
Target BOM Cost being a “Target BOM Cost”). The Parties shall review the Target BOM Cost for each Product on an at least an annual
basis, including
comparing each such Target BOM Cost to the actual BOM cost, and based on such review, Customer may set a new Target BOM Cost for the following
twelve (12) months or on a Order-by-Order basis.
(b) Materials Purchasing. The Parties shall collaborate on the sourcing of all materials needed to assemble a given Product
(“Materials”) so as to keep the Target BOM Cost and actual BOM cost for such Product as low as possible while maintaining quality, adequate inventory
(both for manufacturing and for
safety stock), warranty terms approved by Customer and key performance metrics such as on-time delivery and minimal
defects. If such sourcing activities will result in actual BOM costs for a Product being [***] or less than the Target BOM Cost
for such Product while also
providing for inventory levels of Materials approved by Customer and the approved warranty, then Cirtronics may source all Materials for such Product as
needed to maintain the agreed inventory levels without further
input from Customer. However, if such sourcing activities will result in (1) actual BOM
costs for a Product being more than [***] of the Target BOM Cost for such Product, (2) inventory levels for one or more of the Materials being materially
above or below the levels approved by Customer or (3) a warranty that is worse for Customer as compared to the approved warranty terms, then Cirtronics
must first notify Customer of this fact and obtain Customer’s approval before sourcing the
Materials that do not meet the requirements set forth in this
Section 4.4(b).
(c) Minimum Buys. Customer acknowledges that certain suppliers may require Cirtronics
to place orders for specified minimum
quantities of Materials (“Minimum Buys”), and Customer agrees to be liable for all Minimum Buys that it approves under Section 4.4(b). Any such
Minimum Buy that becomes Excess Material and/or Obsolete Material shall be treated in accordance with Section 4.4(d).
(d) Excess and Obsolete Material Inventory. No more than two times per year,
Cirtronics shall advise Customer in writing of what it
believes to be Excess Material or Obsolete Material in its inventory and the “Delivered
Cost” (defined as Cirtronics actual cost of the material plus
[***] markup on said costs for handling) of such material (the “E&O List”). Within [***] after receiving Cirtronics E&O List, Customer shall: (i) advise
Cirtronics of any Materials on the E&O List that it reasonably believes is not Excess Material or Obsolete Material, and the reasons therefor, and (ii) shall
issue to Cirtronics a purchase order for (1) all undisputed Obsolete Material and (2) all undisputed Excess Material wherein Cirtronics has elected to sell
back such Excess Material to Customer. For the undisputed Excess Material that
Cirtronics has not sold back to Customer, Cirtronics has the right to
impose an inventory carrying charge of [***] per annum on the Delivered Cost of such Excess Material. Cirtronics shall invoice Customer no later than
thirty (30) days from
receipt of Customer’s purchase order for the Obsolete Material and Excess Material, and Customer shall pay Cirtronics its Delivered
Cost for such undisputed Excess Material and Obsolete Material within the payment term specified in Section 3. Cirtronics and Customer shall work in
good faith to reach agreement, within twenty
(20) business days after Cirtronics delivers an E&O List, regarding disputed Excess Material and Obsolete
Material on such E&O List in accordance with the Escalation Process under Section 17.5(a). The term “Obsolete Material” shall mean the inventory of
Materials for which there is no demand as a result of an ECO (as defined in Section 7.1(b)). The term “Excess Material” shall mean the inventory of
Materials that exceeds the amount of Materials required to meet Customer’s firm
orders based upon Customer’s Orders plus Customer’s blanket orders;
provided that (1) Materials purchased by Cirtronics in excess of Customer-approved inventory levels without Customer’s specific approval shall not be
considered Excess Material
and (2) inventory of Materials subject to minimum order quantities that are substantially in excess of that needed to satisfy
Customer’s Orders plus Customer’s blanket orders may also be considered Excess Material.
5. DELIVERY AND ACCEPTANCE
5.1 Delivery. All Product deliveries shall be Ex Works (INCOTERMS 2020) Cirtronics’
facility of manufacture in New Hampshire (the
“Facility”).
Title to and risk of loss or damage to the Product shall pass to Customer upon the earlier of Cirtronics’ tender of the Product to Customer’s
designated carrier or storage of the Product at the Facility as Customer-owned inventory. Cirtronics
shall mark, pack, package, and crate Products in
accordance with Customer’s Specifications. Customer shall be responsible for securing all export and/or import licenses and documentation, as required by
applicable law, to export and/or import
the Products. Upon Cirtronics request and if Cirtronics has agreed to arrange for shipment of Product
notwithstanding ExW delivery at the Facility, Customer shall provide Cirtronics with the necessary export and/or import licenses prior to
Cirtronics’
shipment of any Products under this Agreement.
5.2 Acceptance. Customer shall have the right to inspect deliveries of Products to
identify non-conformities with the requirements of this
Agreement. Acceptance or rejection of the Product shall occur no later than [***] after actual receipt of Product by Customer’s end-user customer and
shall be based solely on whether the Product passes an acceptance test procedure or inspection, which
shall be mutually agreed upon by Customer and
Cirtronics and designed to demonstrate compliance with the Specifications. Products shall be deemed accepted if Customer does not deliver written notice
of rejection within the applicable period
set forth above. Unless the Product is timely rejected by Customer, all Product returns shall be handled in
accordance with Section 8 (Warranty). Prior to returning any rejected Product, Customer shall obtain a return material authorization (“RMA”) number
from Cirtronics, which Cirtronics shall issue so long as Customer specifies the reason(s) for such
rejection when requesting such RMA. Customer shall
return such Product in accordance with reasonable Cirtronics’ instructions. In the event a Product is rejected, Cirtronics shall have a reasonable opportunity
to cure any defect which led to
such rejection. Customer shall pay all charges, plus a minimum handling charge of [***], for invalid or “no defect found”
rejections.
6. ENVIRONMENTAL MATTERS
Because Customer may desire to achieve compliance with laws governing environmental compliance, including but not
limited to European
Union Directive 2002/95/9EC on the Restriction on the use of certain Hazardous Substances in electrical and electronics equipment and Directive
2002/96/EC on Waste Electrical and Electronic Equipment (“WEEE”) (collectively, “Directives”), all of which limit the
importation of certain dangerous
substances, Customer shall ensure that all Product designs, bills of materials, and approved vendor lists specify that all material and materials incorporated
into Products that need be, or that Customer desires to
be, compliant with any environmental law(s), including the Directives (“Environmentally
Compliant”), and the packaging and labeling of such
Environmentally Compliant Products, meet the requirements of the applicable environmental law(s).
Absent written agreement of the Parties, Cirtronics assumes no obligation to create, gather, or maintain documentation or other data demonstrating or
purporting to demonstrate that Materials or Products, or the packing and labeling of Materials or Products, meet the requirements of any applicable
environmental laws, including the Directives, and any implementing legislation. However, at
Customer’s written request, Cirtronics will certify in writing
that its manufacturing processes comply with any such applicable environmental laws (including Conflict Minerals) to the extent such compliance is
required under this Agreement. For
any Products subject to the WEEE Directive, as amended, and including any applicable implementing legislation,
Customer agrees to create, obtain, and/or utilize such recycling mechanisms as required by WEEE which provide for the collection of waste
electrical and
electronic equipment. No adjustments in pricing shall be allowed for Customer’s agreement to undertake this responsibility in compliance with WEEE.
7. CHANGES
7.1 General. Customer may upon sufficient written notice to Cirtronics request or
make changes within the general scope of this Agreement.
Any such changes shall entitle Cirtronics to an equitable adjustment in the contract price, delivery schedule, or other associated items. Such changes may
include, but are not limited
to, changes in (a) Specifications, (b) methods of packaging and shipment, (c) quantities of Product to be furnished, (d) delivery
date, or (e) Customer-Furnished Items (as defined in Section 9.1).
(a) Non-ECO Changes. For requested changes in delivery dates or quantities of
Products, Customer shall issue a revised Order to
Cirtronics which shall account for any increased costs for such change, and Cirtronics shall accept or reject such revised Order in accordance with Section
4.1(b).
(b) ECO Changes. All requested changes other than changes in delivery date or quantity
of Products to be furnished shall be made
by Customer via an engineering change order (“ECO”). If any proposed ECO causes either an increase or decrease in Cirtronics’ cost or the time required
to implement the ECO, the Parties shall mutually agree in writing upon the costs, impact on delivery dates
on open Orders, and any other item that may be
impacted by the ECO prior to Cirtronics’ implementation of such ECO. For clarity and unless otherwise agreed by the Parties in connection with
implementing a ECO, the Specifications for a given
unit of Product shall be the Specifications in effect at the time of completion of manufacturing of such
unit even if an ECO is under discussion between the Parties at such time.
7.2 Impact on Excess Material and Obsolete Material. Upon Customer’s written request,
Cirtronics will notify Customer of any Materials
and work in process in Cirtronics’ inventory that has or will become Excess Material or Obsolete Material as a result of any changes requested by
Customer.
7.3 Cost Reductions. The Parties agree that competitive pressures necessitate a
program of continuous improvement. Each Party shall
cooperate in good faith to implement Product cost reductions involving new technologies, Materials cost reduction, productivity, quality and reliability
improvements, and manufacturing
processes (including cycle time and assembly costs).
8. REPRESENTATIONS AND WARRANTIES
8.1 Mutual Representations and Warranties. Each Party hereby represents and warrants
to the other Party that: (a) it has the full power, right,
and authority to execute and deliver this Agreement; (b) the individual executing this Agreement is authorized to execute this Agreement; (c) this
Agreement is legal and valid and the
obligations binding upon such Party are enforceable by their terms; and (d) the execution, delivery, and performance
of this Agreement does not conflict with any agreement, instrument, or understanding, oral or written, to which such Party may
be bound, nor violate any
law or regulation of any court, governmental body, or administrative or other agency having jurisdiction over it.
8.2 Customer’s Representations and Warranties. Customer represents and warrants to
Cirtronics that it owns or has the right to use all
Customer-Furnished Items.
8.3 Cirtronics’ Representations and Warranties.
(a) Cirtronics’ represents and warrants to Customer that neither Cirtronics nor to Cirtronics’ knowledge any Person (as defined in
Section 14.1(b)) employed or used by Cirtronics has been debarred under §306(a) or §306(b) of the Federal Food, Drug and
Cosmetic Act (codified at 21
USC §335(a) and (b)) and that no debarred Person will in the future be knowingly employed or used by Cirtronics to perform any activities in connection
with this Agreement.
(b) Cirtronics warrants that at the time of delivery of a given unit of the Product: (i) Customer shall obtain good title to such unit of
the Product, free and clear of any
liens, claims or encumbrances arising from the acts or omissions of Cirtronics or any of its affiliates; and (ii) such unit
will be free of defects in workmanship until the earlier of (1) twelve (12) months after Customer’s end-user customer
accepts such unit or (2) fifteen (15)
months after delivery to Customer in accordance with Section 5.1. For the purpose of this Section, “workmanship” shall mean to manufacture in
accordance with the Specifications, or if the Specifications are silent with respect to workmanship standards, then workmanship shall mean
to manufacture
under a quality management system that complies with 21 CFR Part 820 and ISO 13485 and to the extent not inconsistent with the foregoing standards, in
accordance with IPC-A-610, Class 2. Cirtronics shall, at Cirtronics’ expense
but at Customer’s option and as its sole remedy (other than indemnification
under this Agreement), repair, replace or issue a credit for Product found defective during the warranty period for such Product. In addition, Cirtronics will
obtain
warranties from all suppliers of Materials that meet Customer’s then-current warranty requirements (or obtain Customer’s consent for variance from
requirements) and will manage the warranty process for any defective Materials, but will not
independently warrant any third party Materials.
8.4 RMA Procedure. In repairing Products or any part thereof, Cirtronics will follow
21 CFR Part 820 and ISO 13485 and to the extent not
inconsistent with the foregoing standards, IPC 7711 and 7721 repair standards. An RMA number must be obtained by Customer from Cirtronics prior to
return shipment; provided that Cirtronics
shall issue a RMA so long as Customer specifies the defect when requesting such RMA. All returns shall be
processed in accordance with Cirtronics’ RMA procedure. Customer shall pay all charges, plus a minimum handling charge of $100, for
invalid or “no
defect found” returns. Any repaired or replaced Product shall be warranted as set forth in this Section 8 (Warranty) for a period equal to the greater of (i)
the balance of the applicable warranty period relating to such Product or (ii) sixty (60) days after it is received by Customer or its customer
if shipped
directly from Cirtronics to such customer.
8.5 Exclusions from Warranty. The warranty set forth in Section 8.3(b) does not include Products that have defects or failures resulting
from: (a)
Customer’s design of the Product; (b) accident, disaster (including lightning or excessive voltage), neglect, abuse, misuse, improper handling
(including improper handling in accordance with static sensitive electronic device handling
requirements), testing, storage, installation, or maintenance
after the applicable unit of Product was delivered to Customer; (c) alterations, modifications or repairs by customers of Customer or alterations and
modifications made by Customer;
or (d) Environmentally Compliant material or Environmentally Compliant manufacturing processes, including, but not
limited to, solder joint failures and other malfunctions caused by lead-free or hybrid soldering processes, new board finishes,
new solder alloys or
chemistries for which the industry has limited experience, or equipment malfunction resulting from whiskers or other similar phenomena. Customer bears
all design and environmental compliance responsibility for the Product.
Customer acknowledges that new Environmentally Compliant manufacturing
processes may result in unforeseen quality or other issues. Without in any manner limiting the scope of this Section 8.5, Cirtronics shall utilize best
practices and industry standards in providing workmanship and shall cooperate with Customer
and suppliers to resolve or minimize such issues. However,
Cirtronics shall not be liable for any increased costs or other liabilities resulting from the same.
8.6 THE REPRESENTATIONS AND WARRANTIES SET FORTH IN THIS SECTION 8 ARE THE ONLY REPRESENTATIONS AND
WARRANTIES MADE BY EITHER PARTY. EACH PARTY MAKES NO OTHER WARRANTY, EITHER EXPRESS OR IMPLIED. ALL
WARRANTIES OF MERCHANTABILITY OR
FITNESS FOR A PARTICULAR PURPOSE OR USE, AND ALL IMPLIED WARRANTIES OF TITLE
FOR ANY CONSIGNED OR CUSTOMER SUPPLIED MATERIALS ARE EXPRESSLY DISCLAIMED AND EXCLUDED HEREFROM.
CIRTRONICS FURTHER MAKES NO WARRANTY THAT THE PRODUCTS WILL MEET ANY
SPECIFICATIONS NOT MADE KNOWN TO
AND/OR EXPRESSLY AGREED TO BY CIRTRONICS.
8.7 Remedy. THE SOLE REMEDY UNDER THIS WARRANTY SHALL BE THE REPAIR, REPLACEMENT OR
CREDIT FOR
DEFECTIVE PRODUCTS AS STATED ABOVE IN SECTION 8.1 AND
9. CUSTOMER FURNISHED EQUIPMENT, MATERIALS AND DOCUMENTATION; SUBCONTRACTORS
9.1 Customer-Furnished Items. Customer shall provide Cirtronics with the software,
firmware, equipment, tooling, documentation and other
items set forth in the Product Quotation accepted by Customer and/or in a writing signed by the Parties that are identified as needed to test or troubleshoot
Products (collectively the “Customer-Furnished Items”). Customer-Furnished Items shall be fit for
their intended purposes and shall be delivered to
Cirtronics in a timely manner. Documentation provided by Customer to Cirtronics, including but not limited to, Specifications, shall be current and
complete. Customer shall be responsible for
schedule delay, or costs associated with the incompleteness, late delivery, non-delivery of, or defects in any of,
Customer-Furnished Items.
9.2 Care of Customer-Furnished Items. All Customer-Furnished Items shall remain the
property of Customer. Cirtronics shall clearly
identify all Customer-Furnished Items by a tag, where appropriate, shall utilize such Customer-Furnished Items solely in connection with the manufacture
of Customer’s Product and shall not suffer
to exist any lien, claim or encumbrance upon Customer-Furnished Items that arises due to any act or omission of
Cirtronics or any of its affiliates. Cirtronics shall not make or allow modifications to be made to Customer-Furnished Items
without Customer’s prior
written consent. Cirtronics shall be responsible for reasonable diligence and care in the use and protection of any Customer-Furnished Items and routine
maintenance and repairs of any Customer-furnished equipment, but
shall not be responsible for major repairs or replacements (including service warranties
and third party calibration to the equipment) or repair or replacement of failed Customer-Furnished Items unless such failure was caused by Cirtronics’
negligence. If any Customer-Furnished Items are defective, Cirtronics has the right to return such defective items to Customer at Customer’s sole expense.
Upon Customer’s written request, Cirtronics shall return to Customer all
Customer-Furnished Items at Customer’s sole expense. Notwithstanding anything
to the contrary herein, including but not limited to Section 8 (Warranty), upon Cirtronics’ return of Customer-Furnished Items to Customer, (a) Cirtronics
shall have no obligation, without any liability to Customer or any third party,
to repair, replace, or refund any (in-warranty or out-of-warranty) Product sold
to Customer prior to the return of Customer-Furnished Items where such repair or replacement of the Product requires use of Customer-Furnished Item, and
(b) any
Products sold by Cirtronics to Customer after the return of Customer-Furnished Items shall be on an “as is” basis if the approved manufacturing,
quality control or quality assurance process requires use of the returned Customer-Furnished Item.
9.3 Subcontractors. Cirtronics reserves the right to qualify all Customer-directed
subcontractors to ensure compliance with Cirtronics’
minimum quality and creditworthiness standards.
9.4 Material Sold by Customer to Cirtronics. Please refer to Cirtronics document C39.
Customer may sell material to Cirtronics from time to
time at a quantity and price to be mutually agreed upon by the parties. If there is a defect in any such material, Cirtronics has the right to return such
material to Customer, at
Customer’s sole expense, for a full refund of the purchase price paid by Cirtronics for such material.
10. INDEMNIFICATION AND LIMITATION OF LIABILITY
10.1 Indemnification Against Personal Injury, Death or Property Damage.
(a) Cirtronics’ Indemnification. Cirtronics shall indemnify, defend, and hold harmless Customer and Customer’s affiliates,
stockholders, members, directors, officers, employees, contractors, agents and other representatives
(the “Customer-Indemnified Parties”) from and
against all
demands, claims, actions, causes of action, proceedings and suits asserted or brought by any third party other than an affiliate of Customer (each,
a “Claim”) and all damages, liabilities, settlements, judgments, fines, penalties, interest, costs and expenses (including reasonable fees and
disbursements
of counsel) of every kind incurred in respect Claims to the extent arising from: (i) the negligence, recklessness or willful misconduct of any of the
Cirtronics-Indemnified Parties (as defined in Section 10.1(b)); (ii) any of the Cirtronics-Indemnified Parties’ failure to comply with
applicable laws; or (iii)
the breach of any representation, warranty, covenant or agreement of Cirtronics set forth in this Agreement.
(b) Customer’s Indemnification. Customer shall indemnify, defend, and hold harmless
Cirtronics and Cirtronics’ affiliates,
shareholders, directors, officers, employees, contractors, agents and other representatives (the “Cirtronics-Indemnified
Parties”) from all Claims (other
than demands, claims, actions, causes of action, proceedings and suits asserted or brought by any affiliate of Customer) and
Losses to the extent arising
from: (i) the negligence, recklessness or willful misconduct of any of the Customer-Indemnified Parties; (ii) any of the Customer-Indemnified Parties
failure to comply with applicable laws including export and
import laws; (iii) the breach of any representation, warranty, covenant or agreement of
Customer set forth in this Agreement; and (iv) personal injury, bodily injury (including death) or property damage alleged to have been caused by the
Products, except to the extent that such injury or damage was the result of the Products not satisfying the warranties set forth in clause (ii) of Section 8.3(b).
10.2 Proprietary Rights.
(a) By Cirtronics. Cirtronics shall indemnify, defend and hold harmless the
Customer-Indemnified Parties from Claims and Losses
arising from or relating to any infringement or misappropriation of any trademark, mask work, copyright, trade secret or any actual or alleged violation of
any other intellectual property
rights arising from or in connection with Cirtronics’ manufacturing processes. If use of the Product is enjoined based on a
Claim of infringement directly and solely due to Cirtronics’ manufacturing process, Cirtronics will, at its sole
expense and option, (i) procure the right for
Customer-Indemnified Parties and the end-users of the Products to continue using the Products or (ii) refund to Customer a pro-rata amount for any
payments made by Customer for the affected
Product. The foregoing states Cirtronics’ sole liability and Customer’s exclusive remedy for such Claims
described in this Section 10.2(a).
(b) Customer. Customer shall indemnify, defend, and hold harmless the
Cirtronics-Indemnified Parties from and against all Claims
arising from or relating to any actual or alleged infringement or misappropriation of any patent, trademark, mask work, copyright, trade secret or any actual
or alleged violation of any
other intellectual property rights arising from or in connection with the Products (except to the extent that such infringement
exists as a result directly and solely from Cirtronics’ manufacturing processes) and/or Customer-Furnished Items.
In addition, Cirtronics has the right to
suspend its performance under this Agreement, without any liability to Customer or any third party, unless Customer provides Cirtronics with adequate
assurance (e.g. bond) with respect to potential
future liability of Claims covered by this Section 10.2(b) with the
adequacy of such assurance being
determined solely by Cirtronics in its reasonable discretion.
10.3 Procedure. A Person entitled to indemnification pursuant to this Section 10 (each, an “Indemnitee”) shall promptly notify the Party
from whom it seeks indemnification under this Section 10 (the “Indemnitor”) in writing of any Claims for which its seeks indemnification under this
Section 10; provided that the failure to give such prompt notice shall relieve the Indemnitor of its obligations under this Section 10 only to the extent of the
prejudice suffered by the Indemnitor as a result of such
failure. Promptly after receipt of such notice, the Indemnitor shall assume and control the
investigation, defense and settlement of such Claim with counsel reasonably satisfactory to the Indemnitee, and the Indemnitee shall reasonably
cooperate
with the Indemnitor’s investigation, defense and settlement of such Claim. If the Indemnitor fails, within a reasonable time after receipt of such notice, to
assume the investigation, defense and settlement of such Claim with counsel
reasonably satisfactory to the Indemnitee or, if in the reasonable judgment of
the Indemnitee, a direct or indirect conflict of interest exists between the Parties with respect to the Claim, the Indemnitee shall have the right to undertake
the
defense of such Claim for the account and at the expense of the Indemnitor; provided that the Indemnitor shall not be liable for any settlement entered
into by Indemnitee without the prior written consent of the Indemnitor, such consent not to
be unreasonable withheld, delayed or conditioned.
Notwithstanding the foregoing, if the Indemnitee in its sole judgment so elects, the Indemnitee may also participate in the defense of such action by
employing counsel at its expense, without
waiving the Indemnitor’s obligation to indemnify and defend. The Indemnitor shall not compromise any Claim
or consent to the entry of any judgment except with the prior written consent of the Indemnitee, such consent not to be unreasonable
withheld, delayed or
conditioned
10.4 Limitations of Liability.
(a) TO THE FULLEST EXTENT ALLOWED BY LAW BUT SUBJECT TO SECTION 10.4(c), IN NO EVENT SHALL EITHER
PARTY BE LIABLE TO THE OTHER FOR ANY INDIRECT, CONSEQUENTIAL, INCIDENTAL, PUNITIVE OR SPECIAL DAMAGES, OR ANY
DAMAGES WHATSOEVER RESULTING FROM
LOSS OF USE, DATA OR PROFITS, EVEN IF SUCH OTHER PARTY HAS BEEN ADVISED OF
THE POSSIBILITY OF SUCH DAMAGES.
(b) SUBJECT TO SECTION 10.4(c), IN NO EVENT SHALL CIRTRONICS’ LIABILITY FOR BREACH OF SECTION 8.3(b)
EXCEED THE PURCHASE PRICE FOR THE PRODUCTS FOR WHICH A CLAIM IS MADE.
(c) This Section 10.4 does to apply to liability arising from gross negligence, recklessness, willful misconduct or breach of Section
14.2 or limit obligations under Sections 10.1, 10.1(a) or 10.3.
11. TERMINATION
11.1 Termination for Material Breach. Either Party may terminate this Agreement and/or
an Order hereunder for default if the other Party
materially breaches this Agreement; provided, however, that such termination shall not become until forty-five (45) days after the defaulting Party is
notified in writing of the material breach
and has failed to cure, or given adequate assurances of performance, within such forty-five (45) day period;
provided that the cure period for payment defaults shall be ten (10) days after notice of non-payment is given. The adequacy of
proposed assurances shall
be determined solely by the non-defaulting Party in its reasonable discretion.
11.2 Consequences of Termination.
(a) Upon the termination of this Agreement and/or an Order by Cirtronics under Section 11.1, Cirtronics shall invoice Customer no
later than thirty (30) days from the effective date of termination, and Customer shall pay Cirtronics within the payment term
specified in Section 3, for the
following termination charges: (i) the
contract price for all finished Products existing at the time of termination; (ii) Cirtronics’ cost (including labor,
materials, and a reasonable mark-up of [***] of the value of the work in process) for all work in process; (iii) Cirtronics’
Delivered Cost for all Materials,
including but not limited to, Long Lead-Time Material ordered to meet Customer’s Orders; and/or (iv) any vendor cancellation and restocking charges,
including but not limited to, Cirtronics’ cost for NCNR
material on open order and on contract with suppliers where the material have not yet been shipped
to Cirtronics. Upon payment of such invoice(s), Cirtronics shall make all finished Products, work in process and Materials available at the
Facility for
pickup by Customer or its designated carrier.
(b) Upon the termination of this Agreement and/or an Order by Customer under Section 11.1, Cirtronics shall invoice Customer no
later than thirty (30) days from the effective date of termination for, and Customer shall pay such invoice within the payment term
specified in Section 3,
the contract price for all finished Products
existing at the time of termination and at Customer’s option, one or more of the following: (i) Cirtronics’ cost
(including labor, materials, and a reasonable mark-up of [***] of the value of the work in process) for all work in process; and
(ii) Cirtronics’ Delivered
Cost for all Materials, including but not limited to, Long Lead-Time Material ordered to meet Customer’s Orders. Upon the termination of this Agreement
and/or an Order by Customer under Section 11.1, Cirtronics shall make all finished Product available at the Facility for pickup by
Customer or its
designated carrier as well as any work in process and Materials that Customer elects to purchase under this Section 11.2(b).
(c) Expiration or termination of this Agreement is without prejudice to rights accrued prior to such expiration or termination.
Sections 3, 5, 6,
8 (other than Sections 8.1, 8.2 and 8.3(a)), 10, 11.2, 12.7(b), 12.8, 12.9 and 13 through 17 shall survive
the expiration or termination of this
Agreement for any reason in accordance with their respective terms.
12. QUALITY AND REGULATORY MATTERS
12.1 Permits, Registrations and Licenses. Cirtronics shall obtain and maintain all
permits, licenses and registrations from all governmental
authorities necessary for it to manufacture and supply the Products to Customer including an FDA establishment license. Customer shall obtain and
maintain all permits, licenses and
registrations from all governmental authorities directly related to the Product.
12.2 Quality Agreement. The Parties have entered into a Responsibility and Quality
Agreement on the Effective Date (the “Quality
Agreement”).
In the event of a conflict between this Agreement and the Quality Agreement with respect to quality-related activities outlined in this
Agreement, the Quality Agreement shall control. In the event of a conflict between this Agreement and the
Quality Agreement with respect to all other
matters including allocation of risk, intellectual property rights, liability and financial responsibility, this Supply Agreement shall govern.
12.3 Specifications. Product shall be manufactured by Cirtronics in accordance with
the then-current Specifications. Neither Party shall
make any change to the Specifications, to any Materials described therein, or to the Products (including, without limitation, changes in form, fit, function,
design, appearance or place of
manufacture of the Products or changes which would affect the reliability of any of the Products) unless such change is
made in accordance with Section 7.1 and Cirtronics’ ECO procedure.
12.4 Content of Specifications. The Specifications shall include, but shall not be
limited to: (a) detailed electrical, mechanical, performance
and appearance specifications for each assembly of the Products; (b) the BOM; (c) tooling specifications, along with a detailed description of the operation
thereof; (d) art work
drawings; (e) specifications of Materials; (f) approved vendors list (“AVL”); and (g) packaging requirements.
12.5 Quality of Materials. Cirtronics shall use in its production of Products such
material of a type, quality, and grade specified by Customer
to the extent Customer chooses to so specify in the Specifications and shall purchase Materials only from vendors appearing on Customer’s AVL.
12.6 Compliance with Law. Cirtronics and Customer shall at all times conduct
themselves and all activities performed under this Agreement
in full compliance with applicable laws, as amended from time to time.
12.7 Inspections.
(a) By Customer. Upon reasonable advance written notice and during Cirtronics’
regular business hours, Customer may inspect the
Products and Materials held by Cirtronics for Customer at Cirtronics’ facilities as well as observe the manufacturing of the Products, provided such
inspection and observation does not unduly
interfere with Cirtronics’ operations. If the Person conducting the inspection or observation is not an employee
of Customer, then such Person shall enter into a confidentiality agreement mutually agreed among Cirtronics, Customer and such
Person, and the Persons
conducting the inspection, whether or not employed by Customer, shall observe all security and handling measures of Cirtronics while on Cirtronics’
premises. If the nature of the visit is a qualification or compliance
inspection, Customer’s inspector will conduct a post-inspection debrief with Cirtronics
and subsequently issue a written report with the inspector’s findings. Cirtronics shall promptly develop and implement a plan to address any material
weaknesses or non-compliances identified by the inspector.
(b) By Governmental Authorities. Cirtronics shall advise Customer no later than the
next business day if an authorized agent of any
governmental authority plans to visit the Facility, and/or makes an inquiry regarding the Products or its manufacture or regarding any part of the Facility
that is used in making the Products.
Customer shall have the right to be present at any visit relating to Product and to review in advance and comment on
any response to the communication or investigation submitted by Cirtronics. Cirtronics shall cooperate fully with such
governmental authority and with
Customer in providing the information needed for any such communication. Cirtronics shall provide to Customer copies of any Form 483 or equivalent
document delivered by such governmental authority as a result of
such visit unless the Form 483’s findings are unrelated to the Facility or the Products. If
an authorized agent of any governmental authority visits the Facility in connection with another product or another part of the Facility and such visit
results
in a finding or other action that could materially and adversely affect Cirtronics’ performance under this Agreement, then Cirtronics shall notify Customer
as soon as practicable and shall provide Customer with information concerning
Cirtronics’ response to such finding or action.
12.8 Record Keeping. Cirtronics shall keep complete records and books covering the
manufacture of Products, including details of
procurement of Materials, quality control testing, all Specifications, ECO documentation, product complaint files and all other documents relating to this
Agreement (including production records,
storage records and all such other records required to demonstrate compliance with 21 CFR Part 820 and ISO
13485 in a secure facility during the Term and for ten (10) years thereafter (or such longer period of time as may be required by
applicable law. Cirtronics
shall, permit Customer, at Customer’s expense upon reasonable advance written notice and during regular business hours, to have access to, and make
copies of such books and records.
12.9 Product Complaints and Adverse Events. Customer will be the designated party to
receive Product complaints and adverse event
reports. If Cirtronics is the initial Person to receive the Product complaint or adverse event report, Cirtronics shall (a) if possible, refer the reporter to
Customer and (b) whether or not the
reporter was referred to Customer, notify Customer of the Product complaint or adverse event including all details
provided by the reporter. Cirtronics shall conduct product complaint investigations related to the manufacture of Products upon
reasonable request from
Customer and provide information reasonably available to Customer to close those investigations. For the avoidance of doubt, Customer will have the
ultimate decision-making and approval authority with respect to the
handling of all complaints and specifying required corrective actions with respect to
the Products.
13. FORCE MAJEURE
13.1 Force Majeure Event. For purposes of this Agreement, a “Force Majeure Event” shall mean the occurrence of unforeseen
circumstances beyond a Party’s reasonable control and without such Party’s negligence or intentional misconduct, including, but not limited to, any act by
any governmental author-ity, acts of God, flood, acts of terrorism, malicious damage, act
or omission of the other Party, act of foreign enemy, explosion,
fire, destruction of or damage to or restrictions as to the use of a property by or under any order of government, public or local authority, act of war, strike,
boycott, embargo,
shortage, riot, lockout, labor dispute, civil commo-tion, late delivery of Materials to Cirtronics from Materials purchased from sole-
source suppliers designated by Customer on its AVL, Materials on Customer’s BOM that require special
government approval or rating and such approval
or rating is not provided to Cirtronics in a timely manner, Customer’s failure to timely qualify Materials requested by Cirtronics, worldwide market
shortage of Materials, and end-of-life
Materials for which quantities available to Cirtronics are insufficient to meet Customer’s Orders (as long as
Cirtronics has carried out prudent purchasing practices and informed Customer in writing of such supply issues impacting Materials).
13.2 Notice of Force Majeure Event. Neither Party shall be responsible for any failure
to perform due to a Force Majeure Event; provided
that such Party gives notice to the other Party of the Force Majeure Event as soon as reasonably practicable, but not later than five (5) days after the date on
which such Party knew or should
reasonably have known of the commencement of the Force Majeure Event, specifying the nature and particulars thereof
and the expected duration thereof.
13.3 Termination of Force Majeure Event. The Party claiming a Force Majeure Event
shall use commercially reasonable efforts to mitigate
the effect of any such Force Majeure Event and to cooperate to develop and implement a plan of remedial and reasonable alternative measures to remove
the Force Majeure Event; provided,
however, that neither Party shall be required under this provision to settle any strike or other labor dispute on terms it
considers to be unfavorable to it. Upon the cessation of the Force Majeure Event, the Party affected thereby shall
immediately notify the other Party of
such fact, and use commercially reasonable efforts to resume normal performance of its obligations under the Agreement as soon as possible.
13.4 Limitations. Notwithstanding that a Force Majeure Event otherwise exists, the
provisions of this Section 13 shall not excuse: (a) any
obligation of
either Party, including the obligation to pay money in a timely manner for Product actually delivered or other liabilities actually incurred, that
arose before the occurrence of the Force Majeure Event causing the suspension of performance; or (b) any late delivery of Product, equipment, materials,
supplies, tools, or
other items caused solely by negligent acts or omissions on the part of such Party.
13.5 Termination for Convenience. In the event a Party fails to perform any of its
obligations as a result of a Force Majeure Event for a
cumulative period of ninety (90) days or more from the date of such Party’s notification to the other Party, then the other Party at its option may extend the
corresponding delivery period
for the length of the delay, or terminate this Agreement by giving the affected Party written notice of termination, and
Section 11.2(a) shall apply if Cirtronics is the terminating Party and Section 11.2(b) shall apply if Customer is the terminating Party.
14. CONFIDENTIALITY AND NON-SOLICITATION OF EMPLOYEES
14.1 Definitions. For the purpose of this Agreement,
(a) “Confidential Information” means information (in any form or media) disclosed by or behalf of one Party (the “Disclosing
Party”) to the other Party (the “Receiving Party”) including information regarding a Party’s customers, prospective customers (including lists of
customers and prospective customers), methods of operation, engineering
methods and processes (including any information which may be obtained by a
Party by reverse engineering, decompiling or examining any software or hardware provided by the other Party under this Agreement), programs and
databases, unpublished
designs and patent applications, billing rates, billing procedures, vendors and suppliers, business methods, finances, management,
or any other information relating to such Party (whether constituting a trade secret or proprietary or
otherwise); provided, however, that Confidential
Information does not include information that (i) is known to the Receiving Party on a non-confidential basis prior to receipt from the Disclosing Party,
which knowledge shall be evidenced by
written records, (ii) is or becomes in the public domain through no breach of this Agreement by the Receiving
Party or any of its Representatives (as defined in Section 14.1(c), (iii) is received by the Receiving Party on a non-confidential basis from a third party
without breach of any obligation of
confidentiality, or (iv) is independently developed by the Receiving Party without reference to or use of any
Confidential Information of the Disclosing Party. The Receiving Party’s obligations shall only extend to information that (1) is
marked “Confidential”, (2)
if disclosed orally or otherwise in non-documented form, is identified as confidential at the time of initial disclosure, and is designated as confidential in a
writing provided to the Recipient within thirty (30)
days of disclosure or (3) the reasonable person in the position of the Receiving Party at the time of
receipt would understand to be Confidential Information. Information disclosed by or on behalf of a Party under the [***] (the “NDA”) is Confidential
Information except to the extent that such
information is within one of the exceptions set forth in clauses (i) through (iv) of this Section 14.1(a).
(b) “Person” shall mean and include any individual, partner-ship, association, corporation, trust, unincor-porated organization,
limited liability company or any other business entity or enterprise.
(c) “Representative” shall mean a Party’s affiliates and such Party’s and its affiliates’ employees, agents, or representatives,
including, without limitation, financial advisors, lawyers, accountants, experts, and consultants.
14.2 Nondisclosure and Non-Use Covenants.
(a) In connection with this Agreement, the Disclosing Party may furnish to the Receiving Party or its Representatives certain
Confidential Information. During the Term and for
[***] thereafter, the Receiving Party (a) shall maintain as confidential all Confidential Information, (b)
shall not, directly or indirectly, disclose any such Confidential Information to any Person other than those Representatives of the
Receiving Party whose
duties justify the need to know such Confidential Information and then only after each Representative has agreed in writing to be bound by terms
substantially similar to Sections 14.1 and 14.2 and (c) shall protect such Confidential Information from the unauthorized use or disclosure with the same
degree of care as it treats its own Confidential Information (but
in no case with less than a reasonable degree of care).
(b) The
disclosure of any Confidential Information is solely for the purpose of enabling each Party to perform its obligations, or
exercise or enjoy rights, under this Agreement, and the Receiving Party shall not use any Confidential Information for any
other purpose.
(c) Except
as otherwise set forth in this Agreement, all Confidential Information shall remain the property of the Disclosing Party
and will be promptly returned by the Receiving Party upon receipt of written request therefor.
(d) Each Party shall keep confidential the existence and terms of this Agreement including all pricing and payment terms, provided
that a Party may confidentially disclose this
Agreement and its terms to its Representatives and to potential and actual investors, lenders, acquirers,
licensees, partners and contractors who have a need to know and who are bound by obligations of confidentiality, non-use, and
non-disclosure consistent
with those set forth in this Section 14.
(e) If the
Receiving Party or its Representative is requested or becomes legally compelled to disclose any of the Confidential
Information to a third party, it will to the extent permitted by applicable law provide the Disclosing Party with prompt written
notice. The Receiving Party
shall cooperate, at the Disclosing Party’s expense, with the Disclosing Party’s efforts to oppose the disclosure, but if a protective order or other remedy is
not obtained by the Disclosing Party, then the Receiving
Party may only disclose that part of the Confidential Information that, on advice of the Receiving
Party’s counsel, is legally required to be furnished will be furnished, and use reasonable efforts, at the Disclosing Party’s expense, to obtain
reliable
assurances of confidentiality from the third party.
14.3 Non-Solicitation of Employees. During the Term and for a period of one (1) year
thereafter, neither Party shall directly or indirectly
solicit or recruit for employment (or attempt to solicit or recruit for employment) any of the other Party’s employees. The foregoing does not apply to job
postings on a Party’s website,
third party websites or other generally available job postings.
14.4 Injunctive Relief Authorized. Any material breach of this Section 14 by a Party or its Representatives will cause irreparable injury, and
the non-breaching
Party shall be entitled to seek to equitable relief, including injunctive relief and specific performance, in the event of a breach. The
above will not be construed to limit the remedies available to a Party for breach of any of the
obligations of Section 14.
15. TRADEMARKS/LICENSES
15.1 License. Customer hereby grants to Cirtronics a non-exclusive, royalty free
license (without the right to sublicense) to use Customer’s
technology (including Customer-furnished software or firmware) to manufacture and sell the Products exclusively to Customer and to no other Person.
Upon the termination or expiration
of this Agreement, the licenses granted herein by Customer shall terminate, Cirtronics shall deliver to Customer all
materials possessed by it relating to Customer’s technology, and Cirtronics shall cease all further use of Customer’s
technology. No other rights or licenses
are granted by Customer to Cirtronics relating to Customer’s technology, except as specifically stated in this Section 15. Cirtronics hereby irrevocably and
forever assigns to Customer all right, title and interest in and to any and all improvements, derivatives or changes to the Product made
under this
Agreement and all intellectual property and proprietary rights therein.
15.2 Trademarks. No proprietary or other rights with respect to the trademarks, trade
names or brand names of either Party are conferred
either expressly or by implication, upon the other Party. Cirtronics shall affix such trademarks and/or trade names of Customer on Product manufactured
by Cirtronics for sale to Customer under
this Agreement as set forth in the Specifications. All such trademarks and/or trade names to be so affixed are
recognized by Cirtronics to be the property of Customer and Cirtronics shall not sell or otherwise distribute or dispose of Product
bearing such trademarks
or trade names to any third party.
16. INSURANCE
Cirtronics agrees to maintain during the term of this Agreement: (a) workers’ compensation insurance as prescribed by
the law of the state in
which Cirtronics’ services are performed; (b) employer’s liability insurance with limits of at least $500,000 per occurrence; (c) comprehensive automobile
liability insurance if the use of motor vehicles is required, with
limits of at least $1,000,000 for bodily injury and property damage for each occurrence; (d)
comprehensive general liability insurance, including blanket contractual liability and broad form property damage, with limits of at least $1,000,000
combined single limit for personal injury and property damage for each occurrence and $2,000,000 in the aggregate; (e) comprehensive general liability
insurance endorsed to include products liability and completed operations coverage in the amount
of $2,000,000 for each occurrence and $4,000,000 in the
aggregate; and (f) errors and omissions/professional liability insurance in the amount of $2,000,000 for each occurrence and $4,000,000 in the aggregate.
Customer shall be named as an
additional insured on the insurance described in clauses (e) and (f) of this Section 16. Cirtronics shall furnish to Customer
certificates or evidence of the foregoing insurance indicating the amount and nature of such coverage, the expiration
date of each policy and additional
insured status no later than the Effective Date and annually thereafter. Cirtronics may satisfy coverages amounts through a mix of primary and umbrella or
excess liability insurance, and Cirtronics shall maintain
any of the aforesaid insurances written on a claims made basis for at least three (3) years after its
last delivery of Product under this Agreement or purchase an extending reporting privilege (sometimes called a tail) that covers such three (3)
year period
(or the remaining period thereof).
17. MISCELLANEOUS
17.1 Integration Clause. This Agreement (including the Exhibits to this Agreement and
any documents incorporated by reference) constitutes
the entire agreement of the Parties with respect to its subject matter and supersedes all previous and contemporaneous discussions, negotiations and
agreements with respect to such subject
matter including the NDA. This Agreement shall not be changed or modified except by written agreement,
specifically amending, modifying and changing this Agreement, signed by an officer of Cirtronics and an authorized representative of
Customer.
17.2 Order of Precedence. All Orders, order acknowledgments and invoices issued
pursuant to this Agreement are issued for convenience of
the parties only and shall be subject to the provisions of this Agreement and the Exhibits hereto. When interpreting this Agreement, precedence shall be
given to the respective parts in
the following descending order: (a) this Agreement; (b) Exhibits to this Agreement; (c) Product Quotations accepted by
Customer; (d) if Orders are used to release Product, those portions of the Order that are not pre-printed and which are
accepted by Cirtronics; and (e) other
documents incorporated by reference herein. The Parties acknowledge that the preprinted provisions on the reverse side of any such Order, order
acknowledgment, or invoice shall be deemed deleted and of no
effect whatsoever.
17.3 Assignment. Neither this Agreement nor any rights or obligations hereunder shall
be transferred or assigned by either Party without the
written consent of the other Party, which consent shall not be unreasonably withheld or delayed, except that either Party may, without the other Party’s
consent, assign this Agreement to an
affiliate of the assigning Party or to the successor pf substantially all of the business or assets of the assigning Party to
which this Agreement relates; provided that the assignee shall agree in writing to be bound by the obligations of the
assignor under this Agreement or be
bound by such obligations by operation of law. Assignment does not relieve the assignor of the obligations of this Agreement, and any assignment in
violation of this Section 17.3 shall be null and void ab initio. For purposes of this Agreement, “assignment” means assignment,
merger, consolidation, sale
of assets and change of control transactions.
17.4 Notices. Wherever one Party is required or permitted or required to give written
notice to the other under this Agreement, such notice
shall be deemed given: (a) when delivered personally; (b) when received or refused, if mailed by registered or certified mail (return receipt requested),
postage prepaid; or (c) when
delivered or delivery is refused if sent by reliable express courier service with a confirmation of delivery or refusal to accept
delivery, to the Parties at the following addresses (or at such other address for a Party as shall be specified by
like notice; provided, that notices of a change
of address shall be effective only upon receipt thereof):
If to Customer:
with a copy to:
Lifeward, Inc.
200 Donald Lynch Boulevard
Marlborough, MA 01752
If to Cirtronics:
with a copy to:
Cirtronics Corporation
528 Route 13 South
Milford, NH 03055
17.5 Disputes/Choice of Law.
(a) The
Parties shall attempt to resolve any disputes between them arising out of this Agreement through good faith negotiations. If
a Party determines that such attempt at resolution has failed, such Party may enforce this Agreement to the extent
permitted by applicable law.
(b) This
Agreement shall be construed in accordance with the substantive laws of the State of Delaware excluding the laws of any
jurisdiction that would result in the application of the laws of any jurisdiction other than the State of Delaware and the
federal laws of the United States.
17.6 Waiver. No waiver of any term or provision of this Agreement will be valid unless
such waiver is in writing signed by an authorized
representative (which for Cirtronics shall be an officer of the company) of the Party against whom enforcement of the waiver is sought. No waiver of any
rights or breach of any provision of
this Agreement will constitute a waiver of any other rights or breach of any other provisions, nor will it be deemed to
be a general waiver of such provision by the waiving Party or to sanction any subsequent breach thereof by any other Party.
17.7 Interpretation. Except where the context expressly requires otherwise: (a) the
use of any gender herein shall be deemed to encompass
references to either or both genders, and the use of the singular shall be deemed to include the plural (and vice versa); (b) the words “include”, “includes”
and “including” shall be deemed
to be followed by the phrase “without limitation” and shall not be interpreted to limit the provision to which it relates; (c)
the word “will” shall be construed to have the same meaning and effect as the word “shall”; (d) any definition of or
reference to any agreement, instrument
or other document herein shall be construed as referring to such agreement, instrument or other document as from time to time amended, supplemented or
otherwise modified; (e) any reference in this
Agreement to any Person shall be construed to include the Person’s successors and assigns; (f) the words
“herein”, “hereof” and “hereunder”, and words of similar import, shall be construed to refer to this Agreement, and not to any particular
provision of this
Agreement; (g) all references herein to Sections, Exhibits or Schedules shall be construed to refer to Sections, Exhibits or Schedules of this Agreement; (h)
the word “notice” means notice in writing (whether or not
specifically stated); (i) references to any specific law, rule or regulation, or article, section or
other division thereof, shall be deemed to include the then-current amendments thereto or any replacement or successor law, rule or regulation
thereof; and
(j) the term “or” shall be interpreted in the inclusive sense commonly associated with the term “and/or.”
[INTENTIONALLY LEFT BLANK; SIGNATURE PAGE FOLLOWS]
IN WITNESS WHEREOF, the Parties have caused this
Agreement to be executed on the Effective Date by their respective duly authorized
officers.
CIRTRONICS CORPORATION
LIFEWARD, INC.
By: /s/ Thomas J. Ferrin
By: /s/ Michael A. Lawless
Thomas J. Ferrin
Michael A. Lawless
Chief Revenue Officer
Chief Financial Officer
October 8, 2024
October 8, 2024
EXHIBIT A
[***]
Exhibit 19.1
LIFEWARD LTD.
INSIDER TRADING POLICY
This document sets forth the Insider Trading Policy (the “Policy”) of Lifeward Ltd. (“Lifeward”). The Policy establishes the policies and
procedures that govern trading by Lifeward personnel in Lifeward securities and securities of any other company about which such personnel learns
material, nonpublic
information in the course of performing his or her duties for Lifeward. The Policy has been adopted by Lifeward to fulfill its
responsibilities as a public company under U.S. federal securities laws to prevent insider trading and to help its
personnel avoid the severe consequences
associated with violations of the insider trading laws. The Policy is intended to prevent even the appearance of improper conduct on the part of anyone
employed by or associated with Lifeward. Should you
have any questions regarding this Policy, please contact Michael Lawless, the Company’s CFO and
the “Securities Compliance Officer”.
It is important that all Lifeward personnel review the Policy carefully. Noncompliance with the Policy is grounds for disciplinary action,
including and up to
immediate termination. Failure to comply with the policies and procedures set forth below also can result in a serious violation
of the U.S. federal securities laws by the person trading, leading to potential civil and criminal penalties on that
person.
I.
Scope of Policy
All directors, officers and other employees of Lifeward and its subsidiaries, and all contractors who devote all or substantially all of their time to
Lifeward, and if designated
by the Securities Compliance Officer, any other consultant or contractor to Lifeward, are subject to the prohibitions set forth in
this Policy (each such person subject to the Policy is referred to as a “Covered Person”).
The restrictions imposed by the Policy apply to trading in any Lifeward securities, which includes ordinary shares, options to purchase ordinary
shares, any other type of
securities that Lifeward may issue (such as convertible debentures, warrants and exchange-traded options), and any derivative
securities that provide the economic equivalent of ownership of any of Lifeward’s securities or an opportunity, direct or
indirect, to profit from any change
in the value of Lifeward’s securities, except for trades made pursuant to plans approved by the Securities Compliance Officer in accordance with this policy
that are intended to comply with Rule 10b5-1 under the
Securities Exchange Act of 1934, as amended (the “Exchange Act”), (as discussed in Part V of
this Policy)
(“Derivative Securities”). The restrictions imposed by the Policy also apply to a situation in which, during the course of your service to or
employment by Lifeward, you become aware of
material nonpublic information about another company (1) with which Lifeward has an existing business
relationship, including but not limited to, Lifeward’s distributors, vendors, customers or suppliers or collaboration, marketing, research,
development or
licensing partners, or (2) with which Lifeward is in active discussions concerning a potential transaction or business relationship, neither you nor your
Associates (a defined below) may trade in any securities of that company, give
trading advice about that company, tip or disclose that information, pass it
on to others or engage in any other action to take advantage of that information.
II.
Additional Persons Subject to this Policy
Each of the policies and procedures under the Policy that is binding on a Covered Person also applies to the “Associates”
of such Covered Person,
which consist of:
•
(i) your Family Members (“Family Members” are (a) your spouse or domestic partner, children, stepchildren, grandchildren, parents,
stepparents, grandparents, siblings and in-laws who reside in the same household as you, (b) your children
or your spouse’s children who
do not reside in the same household as you but are financially dependent on you, (c) any of your other family members who do not reside
in your household but whose transactions are directed by you, and (d) any
other individual over whose account you have control and to
whose financial support you materially contribute. (Materially contributing to financial support would include, for example, paying an
individual’s rent but not just a phone
bill.).);
•
all trusts, family partnerships and other types of entities formed for your benefit or for the benefit of a member of your family and over
which you have the ability to influence or direct investment decisions concerning securities;
•
all persons who execute trades on your behalf; and
•
all investment funds, trusts, retirement plans, partnerships, corporations and other types of entities over which you have the ability to
influence or direct investment decisions concerning securities, unless the entity engages in the
investment of securities in the ordinary
course of its business (e.g., an investment fund or partnership), confirms to the reasonable satisfaction of the Securities Compliance
Officer that it has established its own policies and procedures
for compliance with insider trading restrictions under applicable securities
laws and is aware that securities laws prohibit any person or entity who has material nonpublic information concerning Lifeward from
purchasing or selling
securities of Lifeward or from communicating such information to any other person under circumstances in which it
is reasonably foreseeable that such person is likely to purchase or sell securities.
Situations may exist where a Covered Person has a record ownership of or beneficial interest in securities, but has no responsibility for investment
decisions, such as, for
example, where the investment decisions have been delegated to an investment adviser. In such cases, this Policy is not intended to
proscribe dealings in securities so long as the Covered Person has neither discussed the merits of the investment
with, nor provided inside information to,
the person or persons having the decision-making investment responsibility. Similarly, this Policy does not proscribe the purchase, sale or holding of an
interest in a publicly traded mutual fund, even if
the fund holds or trades in Lifeward securities or Derivative Securities.
For the avoidance of doubt, it is hereby clarified that all prohibitions, policies and procedures detailed in this Policy apply not only to each
Covered
Person, but also to his or her Associates and all persons and entities listed in this Section II, even if it is not explicitly stated so below.
Each Covered Person is responsible for making sure that any Associate or other persons and entity
listed in this Section II that is subject to this
Policy complies with it. Any reference to “Covered Person” below shall be deemed to include such additional persons.
III.
General Insider Trading Prohibition
Any Covered Person who possesses knowledge of any “material information” concerning Lifeward that has not been disclosed to the public is
prohibited from (i) trading in Lifeward
securities or Derivative Securities, (ii) advising others to trade or to refrain from trading in Lifeward securities or
Derivative Securities, or (iii) disclosing the material information to any other person for the purpose of enabling such person
to trade or to refrain from
trading in Lifeward securities or Derivative Securities. These restrictions remain in effect until the information is fully disclosed to the public or until the
information, although not disclosed, ceases to be material.
For purposes of insider trading liability, it does not matter that delaying the transaction until the material nonpublic information is disclosed or
ceases to be material might
cause the Covered Person or an Associate of a Covered Person to incur a financial loss, or whether there is some independent
reason for the transaction (such as the need to raise money for an emergency expenditure). In addition, except in the
limited circumstances discussed below
(see “Approved Trading Plans”), it does not matter that a Covered Person or an Associate of a Covered Person may have decided to engage in a
transaction
before learning of the undisclosed material information. Further, it also is irrelevant that publicly disclosed information about Lifeward or any other
applicable company would, without consideration of the undisclosed material
information, provide a substantial basis for engaging in the transaction. The
federal securities laws do not recognize any such mitigating circumstances and further, even the appearance of an improper transaction must be avoided to
preserve
Lifeward’s reputation for adhering to the highest standards of conduct.
Material Information
In general, information is considered material as it relates to any company if there is a substantial likelihood that a reasonable shareholder or
potential investor would
consider the information important in making a decision to buy, hold or sell securities of such company. While this standard is not
always easy to apply, any information that could be expected to affect the price of a company’s securities (or any
security that derives its value from such
securities), whether positive or negative, should be considered material. Some examples of information that is almost always regarded as material include:
significant transactions such as pending or
proposed mergers, tender offers, acquisitions or dispositions; financial forecasts (especially earnings estimates);
corporate restructurings; regulatory rulings; unanticipated changes in the level of sales, earnings or expenses or earnings that are
not consistent with the
consensus expectations of the investment community; material changes to previously filed financial statements; credit rating changes; stock splits; stock
dividends; equity or debt offerings; changes in senior management or
member of our Board of Directors; entry into or loss of a substantial contract not in
the ordinary course of business; impending bankruptcy or the existence of severe liquidity problems; significant actual or threatened litigation or
governmental
investigations or major developments in such matters; cybersecurity risks and incidents, including the discovery of significant vulnerabilities
or breaches; and similar matters.
The above items will not always be material. For example, some new products or contracts may clearly be material while others may not be. No
“bright-line” standard or list of
items can adequately address the range of situations that may arise; information and events should be carefully considered
in terms of their materiality to Lifeward. Any Covered Person who has questions as to the materiality of any nonpublic
information is advised to contact the
Securities Compliance Officer for guidance. When in doubt as to the materiality of any nonpublic information, Covered Persons should refrain from
trading.
Public Disclosure
Disclosure of material information to the public generally means the disclosure of the information in a filing with the U.S. Securities and
Exchange Commission (the “SEC”) (such as Lifeward’s annual report on Form 10-K or current reports on Form 8-K) or otherwise released broadly to the
marketplace (such as by a press release). More limited dissemination of the information, such as in a company communication to employees (even if it is
to all employees generally), does not qualify as public disclosure. To ensure adequate disclosure, two full
trading days should be permitted following public
disclosure to allow the securities markets an opportunity to digest the news.
Tipping
Covered Persons who cannot trade in Lifeward securities, securities of any other company, or Derivative Securities, by reason of the possession of
material, nonpublic information
also may not either (i) disclose such information to any other person for the purpose of allowing the other person to trade
in the above securities, whether or not you intend to or actually do realize a profit (or any other benefit), (ii) recommend
to any person that such person
engage in or refrain from engaging in any transaction involving Lifeward’s securities, or (iii) provide trading advice with respect to the above securities
(even though the nonpublic information that provides the
basis for the advice is not disclosed to the person). Any such disclosure or trading advice
constitutes a violation of the federal securities laws (referred to as “tipping”) and can result in liability for both the tipper and the tippee, as well
as for
Lifeward and supervisory personnel.
IV.
Blackout Periods1
Covered Persons are prohibited from trading in Lifeward securities or Derivative Securities during blackout periods, regardless of whether they
actually possess material,
nonpublic information.
Regular Blackout Periods
There are four regular blackout periods with respect to trading per year (the “Quarterly Blackout Periods”).
Each Quarterly Blackout Period
begins at 12:01 a.m. Eastern time on the 16th day of the third month of the quarter (i.e. 12:01 a.m. Eastern time on each March 16, June 16, September 16
and December 16) and ends at 11:59 p.m. Eastern time on the
close of trading on the second full trading day following the public dissemination by
Lifeward of its quarterly (or, in the case of the fourth quarter, annual) financial results by press release to the national wire services or by making a filing
with the SEC. For the purposes of the foregoing, a full trading day means an entire calendar day in which a session of regular trading hours on the Nasdaq
between 9:30 a.m. and 4:00 p.m. Eastern Time (or such earlier close time as has been set by
exchange rules) has occurred. Covered Persons may be allowed
to trade during Blackout Periods (as defined below) only pursuant to a pre-approved Rule 10b5-1 Plan as described in Section VI below.
1 Note to Lifeward: Company should consider whether they intend for all persons covered by this Policy to be subject to the Blackout Periods. We
typically see
a smaller group of people (those who would regularly receive material nonpublic information, such as the finance team) subject to blackout
periods.
Covered Persons are prohibited from trading in Lifeward securities or Derivative Securities during Quarterly Blackout Periods. A Covered Person
may not donate, make a gift or
make any other transfer of Lifeward securities or Derivative Securities without consideration during a Blackout Period
without the prior approval of the Securities Compliance Officer.
Designated Blackout Periods
Any Covered Person, at any time and from time to time, may be informed by the Securities Compliance Officer that he or she, and his or her
Associates, are subject to a designated
blackout period due to such person’s involvement in or knowledge of a particular matter (a “Designated Blackout
Period” and, together with the Quarterly Blackout Periods, “Blackout
Periods”). Covered Persons so advised are prohibited from trading in Lifeward
securities or Derivative Securities until they receive further written notice from the Securities Compliance Officer. The Securities Compliance Officer may
also impose a Designated Blackout Period to prohibit trading in the securities of other companies to ensure compliance with this Policy. The existence of a
Designated Blackout will not be announced other than to those who are subject to it. Any
Covered Person or their Associates made aware of the existence
of a Designated Blackout Period should not disclose the existence of such blackout for any reason as the Designated Blackout Period may itself be
considered under this Policy to be
material nonpublic information about Lifeward.
It is important to keep in mind that, even if a Blackout Period is not in effect, the prohibition on trading on material, nonpublic
information continues to
apply at all times.
V.
Pre-Clearance Procedures for Restricted Persons
All of the directors and executive officers (as defined by Section 16 of the Exchange Act) of Lifeward and any other Covered Persons designated
by the Securities Compliance
Officer because they have access to material nonpublic information about Lifeward are referred to herein as “Restricted
Persons.” A list of current Restricted Persons is attached hereto
as Exhibit A, and may be updated from time to time by the Chief Executive Officer and
Chief Financial Officer.
Restricted Persons must obtain, even during an open trading window, the approval of the Securities Compliance Officer before effecting a trade in
Lifeward securities or any
Derivative Security (the “Pre-Clearance Requirement”) (to the extent that such persons are permitted to trade in Derivative
Securities consistent with the Other Prohibited Transactions
described in Part VII). The Pre-Clearance Requirement also applies to Associates of the
foregoing individuals.
No Restricted Persons may trade in Lifeward securities unless:
•
The Restricted Person has notified the Securities Compliance Officer of the amount and nature of the proposed trade(s) using the Stock
Transaction Request form attached hereto as Exhibit B. To provide adequate time for the
preparation of any required reports under Section 16 of
the Exchange Act, a Stock Transaction Request form should, if practicable, be received by the Securities Compliance Officer at least two (2)
business days before the intended trade
date;
•
The Restricted Person has certified to the Securities Compliance Officer in writing before the proposed trade(s) that the Restricted Person does not
possess material nonpublic information concerning Lifeward;
•
If the Restricted Person is an executive officer or director, the Restricted Person has informed the Securities Compliance Officer, using the Stock
Transaction Request form, whether, to the Restricted Person’s best knowledge, (a) the
Restricted Person has (or is deemed to have) engaged in any
opposite way transactions within the previous six months that were not exempt from Section 16(b) of the Exchange Act and (b) if the transaction
involves a sale by an “affiliate” of
Lifeward or of “restricted securities” (as such terms are defined under Rule 144 under the Securities Act of
1933, as amended (“Rule 144”)), whether the transaction meets all of the applicable conditions of Rule 144; and
•
The Securities Compliance Officer has approved the trade(s) and has certified their approval in writing (which may be by email).
Restricted Persons who have questions regarding the Pre-Clearance Requirement are advised to contact the Securities Compliance Officer. The
Securities Compliance Officer does not
assume responsibility for, and approval by the Securities Compliance Officer does not protect the Restricted Person
from, the consequences of prohibited insider trading.
VI.
Approved Trading Plans
Transactions by Covered Persons pursuant to a written trading plan (an “Approved Plan”) will not violate this Policy
and are not subject to the
Blackout Period restrictions or pre-approval procedures if the following conditions are met:
•
the Securities Compliance Officer must approve the Approved Plan prior to it being executed;
•
The Approved Plan must comply with the requirements of the Rule 10b5-1 under the Exchange Act, including the following:
(i)
it must be a written, binding contract, instruction or plan entered into outside of a Blackout Period and at such time when the Covered
Person is not in possession of material, nonpublic information;
(ii)
the Approved Plan must expressly specify the amounts, prices and dates of transactions (specifically or through a written formula, or a
combination thereof) or confer discretionary authority on another person (who is not a Covered Person
or Associate and otherwise is not in
possession of material, non-public information) to effect one or more purchase or sale transactions for the account of the instructing person;
(iii)
the instructing person may not exercise any subsequent influence over how, when or whether the transactions are effected; and
(iv)
the purchase or sale must occur pursuant to the Approved Plan.
No Covered Person may have more than one Approved Plan at any time. Following the adoption or modification of an Approved Plan, no
transactions may be initiated until the later
of (i) ninety (90) days following the adoption or modification of such Approved Plan or (ii) two business days
following Lifeward’s filing of the applicable Form 10-Q or Form 10-K for the fiscal quarter in which such Approved Plan was adopted or
modified (the
“Cooling-Off Period”). Notwithstanding the foregoing, in no event shall the Cooling-Off Period exceed one hundred and twenty (120) days for a director
or officer or thirty
(30) days for any other employee.
Any proposed deviation from the specifications of an Approved Plan (including, without limitation, the amount, price or timing of a purchase or
sale) must be reported immediately
to, and be approved by, the Securities Compliance Officer.
The Securities Compliance Officer shall approve any Approved Plan that complies with the terms of this Section VI. Any modification or
termination of an Approved Plan previously
approved by the Securities Compliance Officer requires a new approval by the Securities Compliance Officer.
The Securities Compliance Officer may require as a condition to such approval that the modification or termination occur during a trading
window, that the
Covered Person not be aware of material nonpublic information and that additional conditions, such as a cooling off period, must be satisfied.
A contract, instruction or plan of the type described above will generally only be necessary for a Restricted Person and should not generally be
necessary for other Covered
Persons.
VII.
Other Prohibited Transactions
Lifeward considers it improper and inappropriate for any Covered Person or their Associates to engage in short-term or speculative transactions in
Lifeward securities or in other
transactions in Lifeward securities that may transfer the full risks and rewards of ownership over Lifeward securities.
Therefore, it is Lifeward’s policy that Covered Persons and their Associates may not engage, in any of the following
transactions:
•
Publicly Traded Options. A transaction in options is, in effect, a bet on the short-term movement of Lifeward shares and therefore creates the
appearance of trading based on inside information.
Transactions in options also may focus attention on short-term performance at the expense of
long-term objectives. Accordingly, transactions in puts, calls or other Derivative Securities, on an exchange or in any other organized market,
are
prohibited absent prior written approval of the Securities Compliance Officer.
•
Standing Orders. A standing order placed with a broker to sell or purchase Lifeward shares at a specified price leaves the shareholder with no
control over the timing of the transaction. A
transaction pursuant to a standing order – which does not meet the standards of an Approved Plan –
executed by the broker when the Covered Person is aware of material, nonpublic information may result in unlawful insider trading.
Accordingly,
standing orders are prohibited during any regular or designated blackout period and at any time that the Covered Person is aware of material, non-
public information.
•
Hedging Transactions. Certain forms of hedging or monetization transactions allow Covered Persons to lock in much of the value of their
Lifeward securities, often in exchange for all or part of
the potential for upside appreciation in the securities. These transactions allow the
Covered Person to continue to own the covered Lifeward security, but without the full risks and rewards of ownership. Such transactions may use
methodologies or financial instruments including, but not limited to, short sales, puts, calls, collars, prepaid variable forward contracts and
exchange funds. When that occurs, the Covered Person may no longer have the same objectives as
Lifeward’s other securityholders. Therefore,
Covered Persons are prohibited from employing any such methodologies or using any such financial instruments with respect to a Lifeward
security absent prior written approval of the Securities
Compliance Officer.
•
Margin Calls. You may not use Lifeward’s securities as collateral in a margin account.
•
Pledges. You may not pledge Lifeward securities as collateral for a loan (or modify an existing pledge).
Any Covered Person who has questions as to whether a particular strategy would violate the Policy is advised to contact the Securities Compliance
Officer.
VIII.
Application of the Policy to Lifeward’s Equity Incentive Plans
The provisions of the Policy apply to various investment decisions concerning Lifeward securities made by a Covered Person in connection with
Lifeward’s equity incentive plans,
as are in effect from time to time.
Equity Incentive Plans
The Policy does not apply to the grant or the cash exercise of share options granted under Lifeward’s equity incentive plans as in effect from time
to time, and also would not
apply to the delivery of shares to any entity administrating said plans on behalf of Lifeward upon exercise of such options to the
extent such transactions are permissible under the equity incentive plans. However, the delivery of Lifeward shares
to any third party in payment for the
exercise price of a share option and/or for tax withholding, known as a “cashless” or “same-day sale” exercise, as well as any sale to a third party of
Lifeward shares acquired upon the exercise of a share
option, is subject to the same restrictions that apply to any other sale of Lifeward securities, including
the Pre-Clearance Requirement set forth in Section V if the person effecting any such transaction is a Restricted Person. These restrictions
also apply to
any Associate who acquires a transferred stock option.
The Policy also does not apply to the vesting or delivery of restricted shares or restricted share units. In addition, this Policy does not apply to sell
to cover transactions
where shares are sold on your behalf upon vesting of equity awards and sold in order to satisfy tax withholding requirements, (i) as
required by either Lifeward’s Board of Directors (or a committee thereof) or the award agreement governing such
equity award or (ii) as you elect, if
permitted by Lifeward, so long as the election is irrevocable and made in writing at a time when a trading blackout is not in place and you are not in
possession of material nonpublic information.
IX.
Post-Termination Transactions
The restrictions imposed by the Policy will continue to apply to a Covered Person and their Associates after the termination of his or her
employment with or engagement by
Lifeward for such period of time as such Covered Person is aware of material, nonpublic information until that
information has become public or is no longer material. If a Covered Person’s employment or engagement has ended within a Blackout
Period, he or she
shall be subject to the Blackout Period restrictions detailed above.
X.
Reason for the Prohibition
Under the federal securities laws, it is unlawful for any director, officer or employee of, or any person otherwise associated with, a public
company to trade, or to enable
others to trade, in the securities of that company while in possession of material, nonpublic information. Violators may be
subject to criminal prosecution and/or civil liability.
A criminal prosecution can result in significant fines and imprisonment. Civil actions may be brought by a private plaintiff or the SEC. A person
who has been found in a civil
action brought by the SEC to have violated the prohibition on insider trading by purchasing or selling a security while in
possession of material, nonpublic information, or by communicating such information to another person who engages in such
trading, can be held liable for
a penalty up to three times the profit gained, or the loss avoided, by the person who traded while in possession of material, nonpublic information. The
SEC also has the authority to obtain a court order that bars a
person who has engaged in insider trading from serving, either permanently or for a period of
time, as a director or officer of a public company. There are no limits on the size of the transaction that can trigger insider trading liability.
Relatively
small trades have in the past occasioned civil and criminal investigations and lawsuits.
Insider trading also can generate significant adverse publicity and, as a result, cause a substantial loss of confidence in Lifeward and its securities
on the part of the public
and the securities markets. This could have an adverse impact on the price of Lifeward shares and other securities to the detriment
of Lifeward and its shareholders.
Remember, anyone scrutinizing your transactions in Lifeward securities or Derivative Securities will be doing so after the fact, with the benefit of
hindsight. As a practical
matter, before engaging in any transaction, you should carefully consider how enforcement authorities and others might view the
transaction in hindsight.
XI.
Conclusion
Lifeward will strictly enforce the prohibitions against insider trading and the additional restrictions and procedures set forth in this Policy. Any
Covered Person, or their
Associate, who is uncertain regarding the applicability of the Policy is urged to contact the Securities Compliance Officer prior to
executing any sale or purchase transaction involving Lifeward securities or Derivative Securities to determine if
he or she may properly proceed. Directors
and officers of Lifeward should be particularly careful, since avoiding the appearance of engaging in share transactions on the basis of material, nonpublic
information can be as important as avoiding
consummating a transaction actually based on such information.
XII.
Amendment
This Policy may be amended from time to time with the approval of the Board of Directors or a designated committee thereof.
XIII.
Acknowledgement
We will deliver a copy of this Insider Trading Policy to all current Covered Persons, and to future Covered Persons at the start of their employment
or relationship with Lifeward. Each of these
individuals must sign, date and return the Acknowledgement set forth on Exhibit C attached hereto (or such
other certification as the Securities Compliance Officer may deem appropriate) stating that you have received, read, understand, and
agree to comply with
the terms of this Policy. The attached acknowledgment must be completed and submitted to Lifeward within ten days of receipt. Lifeward may require
you to sign such an Acknowledgement on an annual basis or upon amendment or
modification of this Policy, which Acknowledgement may be in
electronic format. Please note that you are bound by this Policy whether or not you sign the Acknowledgement.
* * *
Revised and Adopted: February [__], 2025
EXHIBIT A
RESTRICTED PERSONS
•
Larry Jasinski
•
Michael Lawless
•
Charles Remberg
•
Jeannine Lynch
•
Almog Adar
•
Ami Kraft
•
Miri Pariente
•
David Hexner
•
Judy Kula
•
Kathleen O’Donnell
•
Craig Peters
•
John William Poduska
•
Randel Richner
•
Joseph Turk
•
Hadar Levy
•
Michael Swinford
•
Robert J. Marshall Jr.
EXHIBIT B
STOCK TRANSACTION REQUEST
Pursuant to Lifeward Ltd.’s Insider Trading Policy, I hereby notify Lifeward Ltd. (the “Company”) of my intent to trade the securities
of the Company as
indicated below:
REQUESTER INFORMATION
Insider’s Name:
_________________________________________
INTENT TO PURCHASE
Number of ordinary shares:
Intended trade date:
Means of acquiring ordinary
shares:
☐
Acquisition through employee benefit plan (please specify):
☐
Purchase through a broker on the open market
☐
Other (please specify):
_____________________________________________________________________________
INTENT TO SELL
Number of ordinary shares:
Intended trade date:
Means of selling ordinary
shares:
☐
Sale through employee benefit plan (please specify):
☐
Sale through a broker on the open market
☐
Other (please specify):
________________________________________________________________________________
SECTION 16
RULE 144 (Not applicable if transaction requested involves a purchase)
☐
I am not subject to Section 16.
☐
I am not an “affiliate” of the Company and the transaction requested
above does not involve the sale of “restricted securities” (as those
terms are defined in Rule
144 under the Securities Act of 1933, as
amended).
☐
To the best of my knowledge, I have not (and am not deemed to
have) engaged in an opposite way transaction within the previous 6
months that was not exempt from
Section 16(b) of the Exchange
Act.
☐
To the best of my knowledge, the transaction requested above will
meet all of the applicable conditions of Rule 144.
☐
None of the above.
☐
The transaction requested will be made pursuant to an effective
registration statement covering such transaction.
☐
None of the above.
CERTIFICATION
I hereby certify that I am not (1) in possession of any material nonpublic information concerning the Company, as defined in the Company’s Insider
Trading Policy and, if applicable, (2) purchasing any
securities of the Company on margin in contravention of the Company’s Insider Trading Policy. I
understand that, if I trade while possessing such information or in violation of such trading restrictions, I may be subject to severe civil
and/or criminal
penalties and may be subject to discipline by the Company including termination of my employment.
Insider’s Signature
Date
APPROVAL
Signature of Securities Compliance Officer (or designee)
Date
*NOTE: Multiple lots must be listed on separate forms or broken out.
EXHIBIT C
ACKNOWLEDGEMENT
I hereby acknowledge that I have read, that I understand, and that I agree to comply with the Insider Trading Policy of Lifeward Ltd. (the
“Company”). I further acknowledge and
agree that I am responsible for ensuring compliance with the Insider Trading Policy by all of my “Associates.” I
also understand and agree that I will be subject to sanctions, including termination of
employment, that may be imposed by the Company, in its sole
discretion, for violation of the Insider Trading Policy, and that the Company may give stop-transfer and other instructions to the Company’s transfer agent
or any brokerage firm managing
the Company’s equity incentive plan(s) against the transfer of any Company securities that the Company considers to be in
contravention of the Insider Trading Policy.
This acknowledgement constitutes consent for the Company to impose sanctions for violation of the Insider Trading Policy, including the Trading
Procedures, and to issue any
stop-transfer orders to the Company’s transfer agent that the Company, in its sole discretion, deems appropriate to ensure
compliance.
Date:
Signature:
Name:
Title:
Send signed Acknowledgement to:
Michael Lawless
Chief Financial Officer
Lifeward Ltd.
mike.lawless@golifeward.com
Exhibit 23.1
Kost Forer Gabbay & Kasierer
Menachem Begin 144,
Tel-Aviv 6492102, Israel
Tel: +972-3-6232525
Fax: +972-2-5622555
ey.com
CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
We consent to the incorporation by reference in the following Registration Statements:
(1) Registration Statements (Form S-3 No. 333-231305, 333-260382 and 333-263984) of Lifeward Ltd.,
(2) Registration Statements (Form S-1 No. 333-235931, 333-239733, 333-251454, 333-254147 and 333-284843) of Lifeward Ltd., and
(3) Registration Statements (Form S-8 No. 333-199688, 333-221357, 333-230485, 333-239258 and 333-267284) pertaining to the Lifeward Ltd. 2006
Stock Option Plan, Lifeward Ltd. 2012 Equity Incentive Plan and Lifeward Ltd. 2014 Incentive
Compensation Plan;
of our report dated March 7, 2025, with respect to the consolidated financial statements of Lifeward Ltd. included in this Annual Report (Form 10-K) of
Lifeward Ltd. for the year ended December 31,
2024.
/s/ KOST FORER GABBAY & KASIERER
A Member of EY Global
March 7, 2025
Tel-Aviv
EXHIBIT 31.1
CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER PURSUANT TO
EXCHANGE ACT RULE 13A-14(A)/15D-14(A)
AS ADOPTED PURSUANT TO SECTION 302
OF THE SARBANES-OXLEY ACT OF 2002
I, Larry Jasinski, certify that:
1. I have reviewed this annual report on Form 10-K of Lifeward Ltd. (the “registrant”);
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact
necessary to make the
statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all
material respects the
financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and
procedures (as defined in
Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for
the registrant and have:
(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be
designed under our supervision, to
ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities,
particularly during the period in which this report is
being prepared;
(b) Designed such internal control over financial reporting, or caused such internal control over financial
reporting to be designed under our
supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external
purposes in accordance with generally accepted accounting
principles;
(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report
our conclusions about the
effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred
during the registrant’s most recent fiscal
quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the
registrant’s internal control over financial
reporting; and
5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over
financial reporting, to the
registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
(a) All significant deficiencies and material weaknesses in the design or operation of internal control over
financial reporting which are reasonably
likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in
the registrant’s internal control
over financial reporting.
/s/ Larry Jasinski
Larry Jasinski
Chief Executive Officer
(Principal Executive Officer)
Date: March 7, 2025
EXHIBIT 31.2
CERTIFICATION OF PRINCIPAL FINANCIAL OFFICER PURSUANT TO
EXCHANGE ACT RULE 13A-14(A)/15D-14(A)
AS ADOPTED PURSUANT TO SECTION 302
OF THE SARBANES-OXLEY ACT OF 2002
I, Mike Lawless, certify that:
1. I have reviewed this annual report on Form 10-K of Lifeward Ltd. (the “registrant”);
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact
necessary to make the
statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all
material respects the
financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and
procedures (as defined in
Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for
the registrant and have:
(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be
designed under our supervision, to
ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities,
particularly during the period in which this report is
being prepared;
(b) Designed such internal control over financial reporting, or caused such internal control over financial
reporting to be designed under our
supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external
purposes in accordance with generally accepted accounting
principles;
(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report
our conclusions about the
effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred
during the registrant’s most recent fiscal
quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the
registrant’s internal control over financial
reporting; and
5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over
financial reporting, to the
registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
(a) All significant deficiencies and material weaknesses in the design or operation of internal control over
financial reporting which are reasonably
likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in
the registrant’s internal control
over financial reporting.
/s/ Mike Lawless
Mike Lawless
Chief Financial Officer
(Principal Financial Officer)
Date: March 7, 2025
EXHIBIT 32.1
CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER PURSUANT TO
18 U.S.C. SECTION 1350
AS ADOPTED PURSUANT TO SECTION 906
OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Annual Report of Lifeward Ltd. (the “Company”) on Form 10-K for the period ended December 31, 2024, as filed
with the
Securities and Exchange Commission on the date hereof (the “Report”), I, Larry Jasinski, do hereby certify, pursuant to 18 U.S.C. Section 1350, as adopted
pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to my knowledge:
•
the Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as
amended; and
•
the information contained in the Report fairly presents, in all material respects, the financial condition and results of
operations of the Company.
/s/ Larry Jasinski
Larry Jasinski
Chief Executive Officer
(Principal Executive Officer)
Date: March 7, 2025
A signed original of this written statement required by Section 906 has been provided to the Company and will be retained by the Company
and furnished
to the Securities and Exchange Commission or its staff upon request.
EXHIBIT 32.2
CERTIFICATION OF PRINCIPAL FINANCIAL OFFICER PURSUANT TO
18 U.S.C. SECTION 1350
AS ADOPTED PURSUANT TO SECTION 906
OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Annual Report of Lifeward Ltd. (the “Company”) on Form 10-K for the period ended December 31, 2024, as filed
with the
Securities and Exchange Commission on the date hereof (the “Report”), I, Mike Lawless, do hereby certify, pursuant to 18 U.S.C. Section 1350, as adopted
pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to my knowledge:
•
the Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as
amended; and
•
the information contained in the Report fairly presents, in all material respects, the financial condition and results of
operations of the Company.
/s/ Mike Lawless
Mike Lawless
Chief Financial Officer
(Principal Financial Officer)
Date: March 7, 2025
A signed original of this written statement required by Section 906 has been provided to the Company and will be retained by the Company
and furnished
to the Securities and Exchange Commission or its staff upon request.